Australia sues Microsoft over Copilot-linked Microsoft 365 price hikes and 'hidden' classic plan"

Australia’s competition regulator has sued Microsoft, alleging the company pushed Microsoft 365 users toward higher-priced plans bundled with Copilot while keeping a cheaper “classic” option effectively hidden behind the cancellation flow. The case will test how AI upsells and interface design intersect with Australian consumer law.

At a glance

Who: Australian Competition and Consumer Commission (ACCC) vs Microsoft.
When: Filed October 27, 2025.
Scope: Communications from October 2024 affecting about 2.7 million subscribers in Australia.
Core claim: Users were led to think they had to move to Copilot-bundled tiers or cancel, while a cheaper classic plan existed but wasn’t disclosed until cancellation.

Price changes cited

Microsoft 365 Personal: ~45% increase to A$159 per year (from A$109).
Microsoft 365 Family: ~29% increase to A$179 per year (from A$139).

What the ACCC alleges

The regulator says Microsoft’s emails and web messaging created an “upgrade or cancel” impression, while the status-quo classic plan (no Copilot, legacy pricing) was only revealed once users started cancellation. That design choice, the ACCC argues, withheld material information and misled consumers.

Why it matters

AI as default: Bundling Copilot into core tiers reframes the baseline price and can make AI appear non-optional.
Hidden legacy tiers: If courts deem the classic plan insufficiently disclosed, vendors may be forced to present non-AI options with equal prominence at purchase and renewal.

Possible penalties

Under Australian Consumer Law, maximum penalties per contravention are the greater of A$50 million, three times any benefit obtained, or 30% of adjusted turnover during the breach period when the benefit cannot be calculated. The ACCC is also seeking injunctions, consumer redress, and costs.

What “classic” means

Classic retains pre-Copilot Microsoft 365 features at legacy pricing. For consumers, it’s essentially the product they already had—without the AI layer. For Microsoft, it functions as a step-down SKU whose visibility is central to the case.

What to watch

Disclosure and timing: Whether information about all viable choices was sufficiently visible before renewal.
Knock-on effects: Similar challenges in other markets if regulators see a reusable pattern around AI bundling and cancellation flows.