Australian Competition and Consumer Commission v Microsoft Corporation and Microsoft Pty Ltd (Federal Court of Australia): Microsoft 365 Copilot Price Increase

Summary

On October 27, 2025, the Australian Competition and Consumer Commission began proceedings in the Federal Court of Australia against Microsoft Corporation and its Australian subsidiary Microsoft Pty Ltd. The ACCC alleges that after Microsoft integrated its Copilot AI assistant into Microsoft 365 Personal and Family plans from October 31, 2024, its two emails to auto-renewing subscribers (the first sent to about 2.7 million of them) and a blog post told subscribers they could either accept Copilot at a higher price or cancel, without mentioning a third option: Classic plans that kept the existing features without Copilot at the old price. The ACCC says the Classic plans appeared only after a subscriber started to cancel. With Copilot, the annual price of Microsoft 365 Personal rose 45% from AUD 109 to AUD 159, and Family rose 29% from AUD 139 to AUD 179. The ACCC alleges breaches of sections 18 and 29(1)(i), (l) and (m) of the Australian Consumer Law and seeks penalties, injunctions, declarations, consumer redress and costs. On November 6, 2025, Microsoft apologized to Australian subscribers, said it could have been clearer about the non-AI option, and offered refunds of the price difference to subscribers who switched to a Classic plan by December 31, 2025. The claims are allegations; no court has made findings or set a penalty.

Key dates

1. October 27, 2025Filed
2. October 21, 2026Checked against sources

Developments are added when the record is reviewed. Next review: January 20, 2027.

Evidence

Each passage is quoted from its source. The quoted passages are re-checked against the live pages every month.

1. The ACCC has commenced proceedings in the Federal Court against Microsoft Australia and its parent company Microsoft Corporation for allegedly misleading approximately 2.7 million Australian customers

   Supports: parties, court and scale: proceedings against Microsoft Australia and Microsoft Corporation over about 2.7 million customers

   The ACCC alleges this information provided to subscribers was false or misleading because there was an undisclosed third option, the Microsoft 365 Personal or Family Classic plans, which allowed subscribers to retain the features of their existing plan, without Copilot, at the previous lower price.

   Supports: the allegation: an undisclosed third option, the Classic plans without Copilot at the old price

   Following the integration of Copilot, the annual subscription price of the Microsoft 365 Personal plan increased by 45 per cent from $109 to $159. The annual subscription price for the Microsoft 365 Family plan increased by 29 per cent from $139 to $179.

   Supports: price increases: Personal AUD 109 to 159 (45%), Family AUD 139 to 179 (29%)

   Microsoft’s communication with subscribers did not refer to the existence of the “Classic” plans, and the only way subscribers could access them was to begin the process of cancelling their subscription.

   Supports: allegation: Classic plans reachable only by starting to cancel

   The ACCC is seeking orders including penalties, injunctions, declarations, consumer redress, and costs.

   Supports: relief sought

   Any penalty that might apply to this conduct is a matter for the Court to determine and would depend on the Court’s findings.

   Supports: no penalty determined; a matter for the Court

   Microsoft sent two emails and published a blog post to inform auto-renewing subscribers (as of 31 October 2024) about the Copilot integration and the impending price increase that would apply at their next renewal.

   Supports: the communications at issue: two emails and a blog post to auto-renewing subscribers as of October 31, 2024

   Microsoft in court for allegedly misleading millions of Australians over Microsoft 365 subscriptions Australian Competition and Consumer Commission (media release, October 27, 2025) Primary source

2. Federal Court of Australia District Registry: New South Wales Division: General

   Supports: court: Federal Court of Australia, New South Wales registry

   AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Applicant MICROSOFT CORPORATION First Respondent MICROSOFT PTY LTD (ACN 002 589 460) Second Respondent

   Supports: parties: ACCC v Microsoft Corporation and Microsoft Pty Ltd

   made false or misleading representations about goods and/or services in breach of ss 18, 29(1)(i), (l) and (m) of the Australian Consumer Law (ACL)

   Supports: legal grounds alleged: ss 18, 29(1)(i), (l) and (m) of the Australian Consumer Law

   Microsoft sent the First Email to approximately 2.7 million Existing AR Subscribers.

   Supports: about 2.7 million auto-renewing subscribers received the first email

   For Microsoft 365 Personal, annual subscription fees increased from $109 to $159, whilst monthly subscription fees increased from $11 to $16.

   Supports: price increase for Microsoft 365 Personal

   Date: 27 October 2025

   Supports: concise statement dated October 27, 2025

   ACCC v Microsoft, Concise Statement (Federal Court of Australia, NSW Registry) Australian Competition and Consumer Commission (filed by the Australian Government Solicitor, October 27, 2025) Primary source

3. In hindsight, we could have been clearer about the availability of a non-AI enabled offering with subscribers, not just to those who opted to cancel their subscription.

   Supports: Microsoft's response: it could have been clearer about the non-AI option

   If you switch to Microsoft 365 [Personal/Family] Classic by 31 December 2025, we’ll refund the difference in price between plans, starting from your first renewal date after 30 November 2024.

   Supports: Microsoft offered refunds to Australian subscribers who switched to Classic by December 31, 2025

   An apology to our Microsoft 365 subscribers in Australia Microsoft Source Asia (November 6, 2025) Primary source

4. The ACCC’s case against Microsoft continues.

   Supports: the case continued after Microsoft's apology (November 2025)

   Microsoft apologizes for not explaining cheaper no-AI M365 plans, and all it took was a government lawsuit The Register (November 6, 2025) Reporting or analysis