Microsoft Sued by Australian Watchdog Over AI Pricing

By Stuart Condie

SYDNEY--Australia's consumer watchdog is suing Microsoft, alleging the U.S. tech giant misled its 2.7 million customers by making it difficult for them to avoid paying for new artificial-intelligence services.

The Australian Competition and Consumer Commission filed a case Monday in Federal Court claiming Microsoft didn't clearly tell existing Microsoft 365 subscribers how to opt out of paying for Copilot AI tools when their annual plans renewed.

The ACCC argues that over the past year Microsoft informed users their subscription fees would rise to reflect the inclusion of Copilot. Although Microsoft's emails and a blog post told customers they could cancel their subscription, the ACCC alleges the company only revealed another option--to decline Copilot and avoid the added cost while remaining subscribed--after a consumer had already begun the cancellation process.

The ACCC said the lack of pricing clarity violates Australian consumer law. It's seeking fines and refunds for affected users. Corporations can faces penalties of as much as 50 million Australian dollars, equivalent to US$32.6 million, for each breach of the law.

"Microsoft deliberately omitted reference to the classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process, to increase the number of consumers on more expensive Copilot-integrated plans," ACCC Chair Gina Cass-Gottlieb said.

Many wouldn't have started the cancellation process because Microsoft Office apps included in 365 are essential for households and businesses, Cass-Gottlieb said.

Microsoft said it is reviewing the allegations.

"Consumer trust and transparency are top priorities for Microsoft. We remain committed to working constructively with the regulator and ensuring our practices meet all legal and ethical standards," Microsoft said.

The ACCC said that the annual price of a Microsoft 365 Personal plan jumped 45% to A$159 after Copilot was added, while the cost of a multiple-user family plan rose 29% to A$179.

Companies can also be fined three times any financial benefit they gained through a violation of the law.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

October 27, 2025 00:57 ET (04:57 GMT)