Microsoft Faces Federal Court Over Alleged Misleading Practices on Microsoft 365 Subscriptions

Microsoft, a multinational technology giant, is facing the Australian Federal Court over allegations of misleading millions of Australian customers about Microsoft 365 subscription options and price increases. The Australian Competition and Consumer Commission (ACCC) claims that Microsoft's communication with subscribers was false or misleading, as the company failed to disclose an alternative plan, Microsoft 365 Personal or Family Classic, which allowed subscribers to retain the features of their existing plan without the AI assistant, Copilot, at the previous lower price.

Key Takeaways:

• The ACCC alleges that Microsoft misled approximately 2.7 million Australian customers by not disclosing the existence of the Microsoft 365 Personal or Family Classic plans, which allowed subscribers to retain their existing plan's features without Copilot at the previous lower price.
• Microsoft's communication with subscribers, including two emails and a blog post, allegedly conveyed that consumers had to accept the more expensive Copilot-integrated plans or cancel their subscription, without mentioning the Classic plan.
• The ACCC believes that millions of Australian consumers who were allegedly misled by Microsoft may have suffered economic harm through the automatic renewal of their subscription with Copilot integration at a higher price.
• The ACCC is seeking orders, including penalties, injunctions, declarations, consumer redress, and costs, against Microsoft Australia and its parent company, Microsoft Corporation.
• The case only relates to Microsoft 365 Personal and Family plans, designed for home use, and does not involve Microsoft 365 subscriptions for business or enterprise.
• Microsoft 365 Personal and Family offerings include software products, collaboration and communication applications, and cloud-based services through OneDrive.
• The alleged conduct is a current ACCC compliance and enforcement priority, with the ACCC seeking to ensure that businesses provide accurate information about their services and prices.

Statistics:

• The ACCC alleges that approximately 2.7 million Australian customers may have been misled by Microsoft's communication.
• Microsoft 365 Personal subscriptions increased in price by 45% from $109 to $159.
• Microsoft 365 Family subscriptions increased in price by 29% from $139 to $179.
• The ACCC has commenced proceedings in the Federal Court against Microsoft Australia and Microsoft Corporation.
• The ACCC is seeking consumer redress for Microsoft 365 Personal and Family subscribers affected by the alleged conduct.

Sources:

• M2 PRESSWIRE, October 27, 2025
• Australian Competition and Consumer Commission (ACCC)
• Microsoft Australia
• Microsoft Corporation