Microsoft Faces Legal Action in Australia Over Alleged Misleading AI Pricing

Microsoft sued for allegedly misleading millions of Australians with its AI pricing

When Microsoft told customers it was jacking up the price by 45% for its office suite, it gave them two options: accept the price for the product - and it's AI add-ons - or cancel. According to Australia's consumer watchdog, the tech giant allegedly failed to share that a third option was available - pay the same lower price and opt out of the AI, named Copilot, in Microsoft 365. The Australian Competition and Consumer Commission (ACCC) has taken Microsoft to federal court on Monday alleging the company misled approximately 2.7 million Australian personal and family plan customers by failing to disclose the third option when the Microsoft 365 plans had Copilot included from 31 October 2024. The ACCC has alleged communications with customers only presented two options: paying the higher price or cancelling the plan. The regulator alleged this information was false or misleading as there was an undisclosed third option of "classic" plans which allowed subscribers to retain the features of existing plans without Copilot at the previous lower price. Consumers were only presented this option when subscribers began cancelling their subscription, the ACCC has alleged. The annual subscription price of the Microsoft 365 personal plan increased by 45% from $109 to $159 with Copilot included. The annual subscription price for the Microsoft 365 family plan increased by 29% from $139 to $179. Microsoft sent two emails and published a blog post to inform auto-renewing subscribers about the Copilot integration and pending price increase. "We allege that Microsoft's two emails to existing subscribers and the blog post were false or misleading as they conveyed that consumers had to accept the more expensive Copilot-integrated plans, and that the only other option was to cancel, the ACCC chair, Gina Cass-Gottlieb, said. "We will allege in court that Microsoft deliberately omitted reference to the classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process to increase the number of consumers on more expensive Copilot-integrated plans." Cass-Gottlieb said the office apps included in 365 subscriptions are essential in many people's lives, and given there are limited substitutes to the bundled package, cancelling may not have been an option people would take lightly but customers may have opted for the classic plan if they had been aware of all the viable options. The ACCC's investigation drew on a significant number of consumer reports as well as online commentary from sites including Reddit, the regulator said. The ACCC is seeking orders including penalties, injunctions, declarations, consumer redress and costs. The maximum penalty would be the greater of $50m, three times the total benefits that have been obtained and are reasonably attributable, or 30% of the corporation's adjusted turnover during the breach turnover period, if total benefits cannot be determined. "Consumer trust and transparency are top priorities for Microsoft, and we are reviewing the ACCC's claim in detail," a Microsoft spokesperson said. "We remain committed to working constructively with the regulator and ensuring our practices meet all legal and ethical standards."

Australia sues Microsoft over 'misleading' AI offer

Sydney (AFP) - Australia's competition watchdog accused Microsoft on Monday of misleading people into paying for its AI assistant Copilot. The authority said it had filed a suit in the Federal Court against Microsoft Australia and its parent Microsoft Corp. The software giant is accused of making "false or misleading" statements to around 2.7 million Australians who subscribe by auto-renewal to Microsoft 365 plans, which include a suite of online Office services. Microsoft allegedly told customers that they had two options: either pay extra for Microsoft 365 services integrated with Copilot, or cancel their subscriptions altogether. But there was a partly hidden third option -- visible only when people started to cancel -- of sticking to existing "Classic" plans without Copilot for the original price, the Australian Competition and Consumer Commission said in a statement. "Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process to increase the number of consumers on more expensive Copilot-integrated plans," commission chair Gina Cass-Gottlieb said. "The Microsoft Office apps included in 365 subscriptions are essential in many people's lives and given there are limited substitutes to the bundled package, cancelling the subscription is a decision many would not make lightly." The commission accused Microsoft of misleading subscribers on personal and family plans since October 31, 2024. Annual subscriptions for Microsoft 365 plans incorporating Copilot were between 29 and 45 percent higher than those without, the watchdog said. The commission is seeking penalties, injunctions, consumer redress, and costs. Microsoft could face penalties of Aus$50 million or more (US$30 million) for each breach. Microsoft did not immediately respond to AFP's request for comment.

ACCC alleges Microsoft misled users into price hikes for AI assistant

Gift 5 articles to anyone you choose each month when you subscribe. Microsoft misled millions of customers into paying more for its artificial intelligence assistant known as Copilot when they did not have to, the competition watchdog alleges. In filings with the Federal Court, the Australian Competition and Consumer Commission alleges the global software giant has made false or misleading statements to about 2.7 million Australians since October last year when it increased the cost of a personal subscription to its office suite by 45 per cent and a family plan by almost 30 per cent. The regulator will seek penalties which could include fines and repayments.

Australia sues Microsoft over 'misleading' AI offer

Australia's competition watchdog accused Microsoft on Monday of misleading people into paying for its AI assistant Copilot. But there was a partly hidden third option -- visible only when people started to cancel -- of sticking to existing "Classic" plans without Copilot for the original price, the Australian Competition and Consumer Commission said in a statement. Australia's competition watchdog accused Microsoft on Monday of misleading people into paying for its AI assistant Copilot. The authority said it had filed a suit in the Federal Court against Microsoft Australia and its parent Microsoft Corp. The software giant is accused of making "false or misleading" statements to around 2.7 million Australians who subscribe by auto-renewal to Microsoft 365 plans, which include a suite of online Office services. Microsoft allegedly told customers that they had two options: either pay extra for Microsoft 365 services integrated with Copilot, or cancel their subscriptions altogether. But there was a partly hidden third option -- visible only when people started to cancel -- of sticking to existing "Classic" plans without Copilot for the original price, the Australian Competition and Consumer Commission said in a statement. "Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process to increase the number of consumers on more expensive Copilot-integrated plans," commission chair Gina Cass-Gottlieb said. "The Microsoft Office apps included in 365 subscriptions are essential in many people's lives and given there are limited substitutes to the bundled package, cancelling the subscription is a decision many would not make lightly." The commission accused Microsoft of misleading subscribers on personal and family plans since October 31, 2024. Annual subscriptions for Microsoft 365 plans incorporating Copilot were between 29 and 45 percent higher than those without, the watchdog said. The commission is seeking penalties, injunctions, consumer redress, and costs. Microsoft could face penalties of Aus$50 million or more (US$30 million) for each breach. Microsoft did not immediately respond to AFP's request for comment.

Microsoft Under Fire In Australia After Watchdog Says Tech Giant Misled 2.7 Million Users Into Paying Higher Fees After AI Copilot Integration - Microsoft (NASDAQ:MSFT)

Australia's competition watchdog has taken Microsoft Corp. (NASDAQ:MSFT) to court, alleging the company misled millions of customers into paying more for its Microsoft 365 subscriptions after bundling them with its artificial intelligence tool, Copilot. Regulator Alleges Microsoft Misled Consumers On Monday, the Australian Competition and Consumer Commission filed a lawsuit accusing Microsoft of deceptive conduct that affected about 2.7 million users, reported Reuters. The regulator claims that beginning in October 2024, Microsoft gave customers the impression they had to upgrade to higher-priced Microsoft 365 personal and family plans that included Copilot. The ACCC said Microsoft failed to make it clear that a cheaper "classic" plan without Copilot was still available for users. A Microsoft spokesperson told the publication that the company is reviewing the ACCC's claim in detail. Microsoft did not immediately respond to Benzinga's request for comments. See Also: Elizabeth Warren Says Trump 'Approved' The Largest Meat Company In World To Be Listed On NYSE Ignoring Corruption And Bribery History, Demands Answers AI-Driven Price Hikes Spark Legal Challenge Following the integration of Copilot, the annual price of Microsoft 365 personal plans rose 45% to A$159 ($103.32), while family plans increased 29% to A$179, the regulator stated. The ACCC said it is seeking penalties, consumer redress, injunctions, and costs against Microsoft Australia Pty Ltd and its U.S. parent company. If found guilty, Microsoft could face fines of up to A$50 million per breach or 30% of its adjusted turnover during the violation period, the report said. Microsoft's AI Momentum Faces Scrutiny The lawsuit comes as Microsoft surged 25.09% year-to-date -- outpacing the S&P 500's 15.73% gain during the same period, according to Benzinga Pro. Last week, it was also revealed that CEO Satya Nadella's annual compensation has climbed 22% to $96.5 million, a feat closely linked to the tech giant's stock performance. In July, Microsoft posted quarterly earnings and revenue that exceeded expectations, with sales climbing 18% -- its fastest growth in more than three years. The company is scheduled to report its next earnings on Oct. 29. Benzinga's Edge Stock Rankings position MSFT in the 97th percentile for Growth, highlighting its strong long-term fundamentals and high investor confidence. Click here to see how it stacks up against its peers. Read Next: After Google's $2.7B Acquisition Of Founders And Staff, This AI Startup Abandons Large Language Model Plans And Shifts Focus Away From Chatbots Photo Courtesy: Tada Images on Shutterstock.com Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. MSFTMicrosoft Corp$524.290.72%OverviewMarket News and Data brought to you by Benzinga APIs

Microsoft Sued by Australian Watchdog Over AI Pricing

SYDNEY--Australia's consumer watchdog is suing Microsoft, alleging the U.S. tech giant misled its 2.7 million customers by making it difficult for them to avoid paying for new artificial-intelligence services. The Australian Competition and Consumer Commission filed a case Monday in Federal Court claiming Microsoft didn't clearly tell existing Microsoft 365 subscribers how to opt out of paying for Copilot AI tools when their annual plans renewed. The ACCC argues that over the past year Microsoft informed users their subscription fees would rise to reflect the inclusion of Copilot. Although Microsoft's emails and a blog post told customers they could cancel their subscription, the ACCC alleges the company only revealed another option--to decline Copilot and avoid the added cost while remaining subscribed--after a consumer had already begun the cancellation process. The ACCC said the lack of pricing clarity violates Australian consumer law. It's seeking fines and refunds for affected users. Corporations can faces penalties of as much as 50 million Australian dollars, equivalent to US$32.6 million, for each breach of the law. "Microsoft deliberately omitted reference to the classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process, to increase the number of consumers on more expensive Copilot-integrated plans," ACCC Chair Gina Cass-Gottlieb said. Many wouldn't have started the cancellation process because Microsoft Office apps included in 365 are essential for households and businesses, Cass-Gottlieb said. Microsoft said it is reviewing the allegations. "Consumer trust and transparency are top priorities for Microsoft. We remain committed to working constructively with the regulator and ensuring our practices meet all legal and ethical standards," Microsoft said. The ACCC said that the annual price of a Microsoft 365 Personal plan jumped 45% to A$159 after Copilot was added, while the cost of a multiple-user family plan rose 29% to A$179. Companies can also be fined three times any financial benefit they gained through a violation of the law.

Australia sues Microsoft over AI-linked subscription price hikes

(Reuters) -Australia's competition regulator on Monday sued Microsoft, accusing it of misleading customers into paying higher prices for Microsoft 365 subscriptions after bundling its AI assistant Copilot into personal and family plans. The Australian Competition and Consumer Commission (ACCC) alleged that from October 2024, the technology giant misled about 2.7 million customers by suggesting they had to move to higher-priced Microsoft 365 personal and family plans that included Copilot. After the integration of Copilot, the annual subscription price of the Microsoft 365 personal plan increased by 45% to A$159 ($103.32) and the price of the family plan increased by 29% to A$179, the ACCC said. The regulator said Microsoft failed to clearly tell users that a cheaper "classic" plan without Copilot was still available. The watchdog said the option to keep the cheaper plan was only revealed after consumers began the cancellation process, a design it argued breached Australian consumer law by failing to disclose material information and creating a false impression of available choices. The ACCC is seeking penalties, consumer redress, injunctions and costs from Microsoft Australia Pty Ltd and its U.S. parent, Microsoft Corp. The ACCC said the maximum penalty that could be imposed on a company for each breach of Australian consumer law was the greater of A$50 million, three times the benefits obtained that were reasonably attributable, or 30% of the corporation's adjusted turnover during the breach period if the value of the benefits could not be determined. "Any penalty that might apply to this conduct is a matter for the Court to determine and would depend on the Court's findings," the regulator said. "The ACCC will not comment on what penalties the Court may impose." Microsoft did not immediately respond to Reuters' request for comment. ($1 = 1.5389 Australian dollars) (Reporting by Sneha Kumar in Bengaluru; Editing by Kim Coghill and Jamie Freed)