Microsoft’s subscription practices are under scrutiny in Australia as the country’s competition regulator takes the tech giant to court. The Australian Competition and Consumer Commission (ACCC) alleges that Microsoft misled approximately 2.7 million Microsoft 365 Personal and Family subscribers over how it communicated a major price increase and subscription change. This case could have wide-reaching implications for Microsoft 365 customers worldwide, highlighting potential breaches in transparency and fair marketing practices.
What’s going on
The Australian Competition and Consumer Commission (ACCC or “A triple C”) has commenced proceedings in the Australian Federal Court, alleging that Microsoft misled around 2.7 million Australian customers of its Microsoft 365 Personal and Family plans by how it communicated the major price rise and subscription change.
(ACCC – Australian Competition and Consumer Commission is a well-respected government agency. They would not be taking court action without good reason or without some prior consultation with Microsoft Australia.)
The change involved the integration of its AI assistant (Copilot) into those plans. That happened in Australia and some other countries from 31 October 2024, as part of a trial before the global rollout in early 2025.
From October 2024, Microsoft Australia raised the annual subscription price of the Personal plan from AUD$109 to AUD$159, and for the Family plan from AUD$139 to AUD$179.
Microsoft told subscribers that to maintain the subscription they must accept the Copilot-integration and pay the higher price or cancel.
The ACCC is claiming this was misleading because Microsoft had also introduced a third, undisclosed option, the “Classic” plan, which allowed subscribers to keep their existing features without Copilot, at the previous lower price.
See All about Microsoft 365 Classic to catch up on these lesser known options.
Legally they are alleging “misleading or deceptive conduct and/or made false or misleading representations about goods and/or services” in breach of four sections of the Australian Consumer Law
Office Watch told readers about the Classic option but that wasn’t widely known, then or now. We still see complaints from people about the price rise on renewal, not knowing from Microsoft’s emails that there’s a cheaper option.
The ACCC has set out their reasoning in detail both in a public statement and a court filing.
Not just Australia
This Aussie action is important for all Microsoft 365 Family or Personal plan users around the world.
That’s because Microsoft used much the same rollout tactics in all the countries they operate in, including the US, Canada, UK and Europe.
The evidence
Microsoft Australia’s communications did not mention the Classic plan, here’s an example email from March/April 2025.
The only way a consumer could access it was by starting the cancellation process. Only on a later screen in that flow did the Classic option appear.
The ACCC alleges Microsoft deliberately omitted reference to the Classic plan to push more consumers onto the more expensive Copilot-integrated plan.
At the time, we warned our readers about the hidden Classic plan:
“If you don’t like the price increase, Microsoft might offer to keep the old rate without Copilot. Look for a Microsoft 365 Classic option to appear if you try to cancel your subscription.”
Office-Watch.com explained at the Copilot comes to Microsoft 365 with many limits and a high price
There’s no doubt that Microsoft didn’t make the cheaper Classic plans obvious to its customers. Whether Microsoft’s conduct is against Aussie law is a matter for the courts.
The end of the Classic plan
This part of the ACCC announcement caught our eye:
“ Existing Microsoft 365 Personal and Family subscribers who have not had their subscription renewed since 8 July 2025 and would like to revert to their previous plan may be able to select the cancel option and follow the steps in the cancellation process until the Classic plan is offered. “
That means Microsoft 365 Personal or Family subscribers who have NOT renewed at the new prices, may be offered the cheaper Classic plan if try to cancel their plan. This isn’t new, Microsoft has already said that the Classic option would only be available to people who had not renewed.
It’s one of the hidden traps in Classic Microsoft 365 plans that Office Watch warned about back in February.
The “8 July 2025” date was given by Microsoft (quoted by the ACCC) and is a mystery because, as far as we know, the Classic plan option has been offered ever since the consumer plan price rise. The ACCC notes that:
“… subscription options and prices offered are entirely in Microsoft’s control and could be subject to change at any time.”
It’s an example of the lack of transparency in the Microsoft 365 plans. Microsoft can and does change the conditions at any time, rarely in the customers favor, though there’s a recent exception.
A point missed by the ACCC is that the plan changes were done in Australia first. The Microsoft 365 price hikes were trialled in Australia and a few other Asia-Pacific countries before the global rollout in 2025. That put Aussie customers at a greater disadvantage.
What it means for Microsoft 365 customers
There’s no immediate change in Microsoft 365 Personal or Family plans, but it does remind everyone of some important points:
- There’s a money saving opportunity to try cancelling a Personal or Family plan and hopefully offered the cheaper Classic plan.
- The much higher price for Microsoft 365 Personal or Family plans which increased between 30-40% earlier this year and is still surprising people as their renewal date comes up.
- Some people will be annoyed to discover that Microsoft didn’t tell them about the cheaper Classic option.
The Australian news is getting worldwide headlines which is the last thing Microsoft wants.
They’d much prefer to offer changing Microsoft 365 plans without any focus on their actions.
Other consumer protections bodies will be closely looking at the Australian situation to see if there’s any similar action possible in their country.
The next steps
Most likely, the ACCC has already tried to negotiate with Microsoft. This court action and public announcement are just the latest steps in an ongoing investigation and process.
The legal ball is in Microsoft’s court. The company has two broad choices:
Settle – come to some agreement with the ACCC to provide some form of restitution. That may or may not include an admission of responsibility.
Fight – let a court case proceed and fight the ACCC’s charges. That could drag on for years and mean a regular flow of adverse news stories.
There’s a risk in continuing the story for months with regular reminders to global customers that they might have been fooled into paying more for Microsoft 365 than they needed to
