The intersection of artificial intelligence and consumer rights has reached a critical juncture in Australia, as Microsoft faces a major federal lawsuit over its handling of Office 365 subscription pricing in the wake of its AI Copilot rollout. The Australian Competition and Consumer Commission (ACCC) alleges that Microsoft misled nearly 2.7 million local customers by failing to disclose the continued existence of lower-priced “classic” plans while aggressively promoting pricier, AI-enhanced alternatives. This case not only highlights growing scrutiny of how Big Tech bundles and prices its services but also raises pressing questions about transparency, fairness, and the ethical responsibilities of global technology leaders.
The Allegations at a Glance
At the heart of the lawsuit is the claim that Microsoft, in rolling out its AI Copilot features across Office 365 (now Microsoft 365), effectively forced customers into a binary choice: either upgrade to a more expensive subscription tier that included the new AI tools or cancel their service altogether. According to the ACCC, Microsoft did not adequately inform users that less expensive “classic” plans—which retained the familiar suite of productivity apps without the AI add-ons—remained available. As a result, many subscribers may have unwittingly transitioned to packages that were $40–$50 more expensive annually, with some facing price hikes of up to 45% compared to their original subscriptions.
The regulator argues that this lack of transparency deprived consumers of the opportunity to make fully informed decisions about their software needs and budgets. Instead of presenting all available options upfront, Microsoft’s approach allegedly channeled users toward its pricier, AI-integrated offerings, raising concerns about both consumer deception and potential anti-competitive conduct.
Microsoft’s Rollout of AI Copilot and Subscription Changes
Microsoft’s introduction of AI Copilot was widely touted as a major leap forward in productivity software, promising to streamline tasks, generate content, and enhance collaboration through artificial intelligence. However, the rollout coincided with significant changes to the company’s subscription model. Where once users could access Microsoft’s core Office applications under a range of plans, the newer, AI-driven options became the default for many customers—often without clear communication about alternatives.
Critics argue that bundling AI capabilities with basic productivity tools was not simply a value-add but a strategic move to justify higher prices and lock users into more lucrative contracts. For businesses and individuals relying on Microsoft’s ecosystem, the lack of clear, accessible information about “classic” plans—which maintained existing features at a lower cost—effectively removed a competitive choice from the market.
The Legal and Regulatory Context
The ACC
