Australia's competition watchdog has accused technology giant Microsoft of misleading about 2.7 million of its customers into paying to use its artificial intelligence (AI) assistant service, Copilot.
The Australian Competition and Consumer Commission (ACCC) has announced that it has filed a Federal Court action against Microsoft Australia and its parent company, Microsoft Corp.
The company is accused of issuing false or misleading statements to Australian customers who subscribed to the Microsoft 365 plan with automatic renewal, which includes the Office suite of online services.
According to the ACCC, Microsoft is accused of informing customers that they had two options: either pay more for a Microsoft 365 plan that was integrated with Copilot, or cancel their subscription entirely.
However, the agency explained that there was a third option that was partially hidden and only appeared when users initiated the cancellation process, which was to stay with their existing classic plan without Copilot at the original price.
ACCC chairwoman Gina Cass-Gottlieb said Microsoft deliberately failed to communicate about the classic plan in its communications and only revealed its existence after customers initiated the cancellation process.
She also said the move was aimed at increasing the number of users on plans that integrated with Copilot, which are much more expensive.
The ACCC also alleges that since October 31, 2024, Microsoft has been misleading customers about personal and family plans.
Annual subscriptions for Microsoft 365 plans that include Copilot were found to be between 29 and 45 percent more expensive than packages that do not include the service.
The watchdog is now seeking penalties, injunctions, compensation to consumers and related costs. Microsoft risks facing fines of AUD50 million (RM156.9 million) or more for each breach.
