ACCC Takes Microsoft to Court Over Alleged Misleading Conduct in Microsoft 365 Price Rise
- Barry Money
- Nov 6, 2025
- 3 min read
The Australian Competition and Consumer Commission (ACCC) has launched Federal Court proceedings against Microsoft Australia and its US parent company, Microsoft Corporation, alleging the tech giant misled around 2.7 million Australian customers over subscription pricing and product options.
At the heart of the case are claims that Microsoft’s communications about its Microsoft 365 Personal and Family plans failed to disclose a cheaper alternative — the “Classic” plan — when introducing its AI assistant, Copilot, into subscription bundles.
What the ACCC Alleges
According to the ACCC, since 31 October 2024, Microsoft informed subscribers that to continue using Microsoft 365, they would need to accept the new AI-integrated version (with Copilot) and pay a higher fee — or cancel their subscription entirely.
However, the regulator says this was misleading because there was a third option available: the Microsoft 365 Personal or Family Classic plan. This lesser-known plan allowed users to keep all existing features without Copilot at the previous lower price.
Critically, Microsoft allegedly concealed the Classic plan — only revealing it after users began the cancellation process. Subscribers had to navigate to their account settings, select Cancel Subscription, and only then were they offered the option to switch to the Classic plan.
“We will allege in Court that Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process,” said ACCC Chair Gina Cass-Gottlieb.
The ACCC argues that Microsoft’s approach denied consumers the ability to make an informed decision about their subscription options.
Price Increases and Consumer Impact
Following the Copilot integration, Microsoft significantly raised its subscription fees:
Microsoft 365 Personal: Up 45%, from $109 to $159 per year
Microsoft 365 Family: Up 29%, from $139 to $179 per year
The ACCC’s case centres on two subscriber emails and a company blog post that communicated these price increases. These messages allegedly gave the false impression that customers had no option but to accept the higher-priced plan or cancel altogether.
The ACCC says many consumers would likely have chosen the Classic plan if they had known it existed — and that millions may have suffered economic harm through automatic renewals at inflated prices.
Consumer Complaints and Evidence
The regulator’s investigation began after receiving numerous consumer reports and analysing discussions on online forums like Reddit. Many users discovered the hidden Classic plan only by accident, when trying to cancel their subscriptions.
This consumer feedback was crucial in alerting the ACCC to Microsoft’s alleged conduct and led to the current enforcement action.
Potential Penalties and Legal Consequences
If found in breach of the Australian Consumer Law, Microsoft could face substantial penalties. The maximum penalties per contravention for corporations are the greater of:
$50 million,
three times the total benefit gained from the conduct, or
30% of the company’s adjusted turnover during the relevant period (if the benefit cannot be determined).
The ACCC is seeking penalties, injunctions, declarations, consumer redress, and costs in this case.
Why This Case Matters
This case underscores the ACCC’s ongoing focus on digital platforms, consumer transparency, and fair trading in the digital economy. Businesses — especially those with subscription-based models — are reminded of their obligations to provide clear, accurate information about product changes, prices, and consumer options.
“All businesses need to provide accurate information about their services and prices,” Ms Cass-Gottlieb said. “Failure to do so risks breaching the Australian Consumer Law.”
What Consumers Can Do
The ACCC has advised that Microsoft 365 subscribers who have not yet renewed since 8 July 2025 and wish to return to their previous plan may be able to do so by selecting Cancel Subscription and following the steps until the Classic plan option appears. However, Microsoft controls its own pricing and options, so these may change at any time.
About Bane Legal Services
At Bane Legal Services, we’re not a law firm and we don’t provide legal advice — but we’re your trusted legal matchmaker. With over 30 years of business experience, we connect Australian business owners and consumers with the right commercial lawyers who specialise in competition, consumer, and digital compliance law.
If your business offers subscription services or digital products, it’s vital to ensure your communications meet Australian Consumer Law standards. Speak with one of our trusted partner lawyers today to ensure your business practices are transparent, compliant, and customer-friendly.
Sources:
Australian Competition and Consumer Commission (ACCC), Media Release: Microsoft in court for allegedly misleading millions of Australians over Microsoft 365 subscriptions, 27 October 2025.
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