Australia’s competition regulator on Monday sued Microsoft, claiming the company misled customers into paying higher prices for its Microsoft 365 software after bundling it with artificial intelligence tool Copilot. The Australian Competition and Consumer Commission (ACCC) alleged that the company misled around 2.7 million customers by suggesting they had to move to higher-priced Microsoft 365 personal and family plans that included Copilot.
The ACCC said that after the integration of Copilot, the annual subscription price of the Microsoft 365 personal plan increased by 45% to A$159 ($103.32) and the price of the family plan increased by 29% to A$179 ($117.29). The regulator also said Microsoft failed to clearly tell users that a cheaper “classic” plan without Copilot was still available.
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“Following a detailed investigation, the ACCC alleges that Microsoft deliberately hid this third option, to retain the old plan at the old price, in order to increase the uptake of Copilot and the increased revenue from the Copilot integrated plans,” ACCC Chair Gina Cass-Gottlieb said.
Cass-Gottlieb also added in a press conference that the regulator viewed it as “very serious conduct” and would be seeking a significant penalty. “We see this as affecting a very significant number of Australian consumers, as being the action by a very major corporation,” she added and also said the regulator will be looking for a penalty that shows that non-compliance with the Australian consumer law “is not just a cost of doing business.”
A Microsoft spokesperson told ABC News the company was reviewing the ACCC’s claim in detail. “Consumer trust and transparency are top priorities for Microsoft,” they said.
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According to Reuters, the ACCC is seeking penalties, consumer redress, injunctions and costs from Microsoft Australia Pty. Ltd. and its U.S. parent, Microsoft Corp. The regulator said the maximum penalty that could be imposed on a company for each breach of Australian consumer law was the greater of A$50 million ($32 million), three times the benefits obtained that were reasonably attributable, or 30% of the corporation’s adjusted turnover during the breach period if the value of the benefits could not be determined.
“Any penalty that might apply to this conduct is a matter for the Court to determine and would depend on the Court’s findings,” it said. “The ACCC will not comment on what penalties the Court may impose.”
ABC News reported in February that a customer had reported the tech giant to the regulator over the pricing changes. The proceedings were lodged in the federal court against Microsoft Australia and its parent company, Microsoft Corporation.