Australia’s competition regulator has sued Microsoft, accusing the tech giant of misleading millions of customers by bundling its AI tool Copilot with Microsoft 365 software and inflating subscription prices without adequately informing users that cheaper alternatives were available. The Australian Competition and Consumer Commission (ACCC) alleges that from October 2024, Microsoft failed to clearly tell users that a cheaper ‘classic’ version of the software without Copilot was still available, leading to significant price hikes. The personal plan subscription price increased by 45% to A$159 ($103.32), while the family plan rose by 29% to A$179. According to the ACCC, Microsoft’s marketing strategies and lack of transparency deceived users into upgrading to more expensive plans instead of opting for the lower-cost options. The ACCC claims that the company’s failure to disclose affordable alternatives misled customers into paying higher prices, which could have been avoided if users had been made aware of the available options.
The lawsuit marks a significant regulatory action against Microsoft, highlighting concerns over how tech companies manage pricing strategies and transparency in the growing AI market. The ACCC has requested that the court order Microsoft to provide full and accurate information to affected customers, offering them refunds for any overpaid amounts. The regulator is also seeking remedies to ensure that Microsoft’s practices change in the future, with the goal of protecting consumer rights and preventing similar misleading tactics. With the case now in court, the outcome could have far-reaching implications for how tech firms handle pricing and marketing in the region, potentially influencing future regulatory actions against other companies. The issue has sparked conversations about the need for stronger consumer protection laws, particularly in an era where AI-driven products are increasingly influencing business models and user behavior.
Microsoft has yet to comment on the allegations, but the lawsuit underscores growing regulatory scrutiny of large tech firms, especially in Australia where governments are increasingly focused on ensuring fair competition and transparency. As the case progresses, it may set a precedent for how other regulatory bodies across the globe approach similar issues involving AI and pricing strategies. The potential financial repercussions for Microsoft could be substantial, both in terms of legal costs and reputational damage. Meanwhile, the affected customers may find themselves in a difficult position, as they could be eligible for refunds but may also face challenges in navigating the process. The ongoing legal battle serves as a reminder of the importance of consumer awareness in the digital age, especially as companies continue to leverage AI and other advanced technologies to influence pricing strategies and user choices.