Why Is Australia Suing Microsoft? The Full Copilot Controversy Explained in 10 Points

New Delhi: Australia’s competition watchdog has taken tech giant Microsoft to court, accusing it of misleading millions of users into paying more for its Microsoft 365 software after bundling it with its new AI tool, Copilot. 

According to a Reuters report, the Australian Competition and Consumer Commission has accused the Redmond giant of misleading nearly 2.7 million customers, since 31 October 2024 with higher-priced Microsoft 365 personal and family plans that included Copilot.

“Following a detailed investigation, 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 to increase the number of consumers on more expensive Copilot-integrated plans,” ACCC Chair Gina Cass-Gottlieb told the press. 

Here’s the full story broken down in 10 points:

1. What's the case 

The Australian Competition and Consumer Commission (ACCC) has filed a lawsuit against Microsoft, claiming the company misled around 2.7 million Australian customers.

2. What triggered the lawsuit

It all started when Microsoft integrated its AI assistant, Copilot, into its popular Microsoft 365 personal and family plans in October 2024 and increased prices significantly.

3. The price hike

After Copilot’s rollout, the annual cost of a Microsoft 365 Personal plan jumped 45%  while the Family plan rose 29%. “We allege that Microsoft’s two emails to existing subscribers and the blog post were false or misleading as they conveyed that consumers had to accept the more expensive Copilot-integrated plans, and that the only other option was to cancel,” Cass-Gottlieb said.

4. The hidden cheaper option

According to the ACCC, Microsoft didn’t clearly inform customers that a cheaper “classic” version of Microsoft 365, without Copilot, was still available. It alleges that the information provided to subscribers was false or misleading. It has even shared a screenshot of the cancellation page, revealing the Classic plan.

5. When users found out

Consumers only learned about this cheaper option after they started cancelling their subscriptions - a design the regulator says created a “false impression” of limited choices.

6. The accusation

The ACCC says Microsoft’s conduct breached Australian consumer law by failing to disclose key information and misleading customers into thinking they had to upgrade.

7. How Microsoft communicated

Emails and blog posts from Microsoft told users that new, higher prices would apply at their next renewal without mentioning the availability of the cheaper, Copilot-free plan.

8. Microsoft’s response

A Microsoft spokesperson said the company is “reviewing the ACCC’s claim in detail”, but did not comment further on the specifics.

9. Possible penalties

If found guilty, Microsoft could face hefty penalties up to A$50 million per breach, or 30% of turnover during the breach period if the financial benefit can’t be calculated.

10. What happens next

The case now moves to court, where penalties and outcomes will be determined. The ACCC says it will not speculate on what the final punishment might be.

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