Australia's competition regulator alleged that Microsoft misled individuals into purchasing its AI assistant Copilot.

The agency announced it had submitted a lawsuit in the Federal Court against Microsoft Australia and its parent company, Microsoft Corp.

The software giant faces allegations of issuing "false or misleading" statements to approximately 2.7 million Australians who automatically renew their Microsoft 365 subscriptions, which encompass a collection of online Office services.

Microsoft reportedly informed customers that they faced two choices: either incur additional charges for Microsoft 365 services that include Copilot, or completely terminate their subscriptions.

However, there was a somewhat concealed third alternative—revealed only when users began to cancel—of remaining on current "Classic" plans without Copilot for the original cost, as stated by the Australian Competition and Consumer Commission.

"Microsoft intentionally left out mentions of the Classic plans in its communications and hid their existence until subscribers began the cancellation process to boost the number of customers on pricier Copilot-integrated plans," said commission chair Gina Cass-Gottlieb.

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"The Microsoft Office applications offered in 365 subscriptions are crucial for many individuals, and since there are few alternatives to the bundled services, ending the subscription is a choice that many would consider carefully."

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The commission charged Microsoft with deceiving subscribers regarding personal and family plans as of October 31, 2024.

According to the watchdog, yearly subscriptions for Microsoft 365 plans that included Copilot were 29 to 45 percent more expensive than those that did not include it.

 

The commission is pursuing fines, prohibitions, consumer compensation, and expenses.

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Microsoft may incur fines of Aus$50 million or greater (US$30 million) for every violation.