The Australian Competition and Consumer Commission (ACCC) has launched Federal Court proceedings against Microsoft Australia and Microsoft Corporation, alleging they misled about 2.7 million Australian customers regarding Microsoft 365 subscription options and price increases following the integration of its AI assistant, Copilot.
The ACCC’s legal action could trigger claims under a D&O policy, as directors and officers may be held personally liable for alleged breaches of consumer law and misleading conduct. The alleged concealment of cheaper options and misleading communication could be considered a failure in professional duty and trigger PI insurance claims for compensation.
In this morning’s media release the regulator said that since October 2024, Microsoft allegedly told subscribers with auto-renewing Microsoft 365 Personal and Family plans that they must accept Copilot and pay higher prices or cancel their subscription. The ACCC claims this was misleading, as Microsoft failed to disclose a third option: the “Classic” plans, which allowed subscribers to retain their existing features without Copilot at the previous, lower price.
The ACCC alleges that Microsoft only revealed the Classic plan option after subscribers began the cancellation process and did not mention it in emails or blog posts about the price increase. The annual price of Microsoft 365 Personal rose by 45% (from $109 to $159), and Family by 29% (from $139 to $179).
ACCC Chair Gina Cass-Gottlieb said Microsoft’s communications denied customers the chance to make informed choices and that many would have chosen the Classic plan if they had known about it. The ACCC is seeking penalties, consumer redress, and other orders.
Consumers who have not yet renewed since 8 July 2025 may still be able to access the Classic plan by starting the cancellation process, though the ACCC notes subscription options remain under Microsoft’s control and may change
