Microsoft faces Federal Court over Office 365 subscription pricing

Australia’s competition regulator has hauled Microsoft into Federal Court, alleging the tech giant misled Office 365 customers into pricier plans during the Copilot AI rollout. The ACCC says millions may have paid more than necessary. Microsoft says it is cooperating. The case could lead to heavy penalties, refunds, and tighter rules for how AI extras are priced and marketed.

• The ACCC alleges Microsoft downplayed or failed to clearly present cheaper plan options when launching Copilot features.
• Local reporting indicates as many as 2.7 million Australian subscribers could be affected, with increases reported up to 50 dollars a year.
• Potential outcomes include substantial fines, refunds, and court orders requiring clearer disclosures across the sector.

The case at a glance

Australia’s consumer watchdog has filed proceedings in the Federal Court, arguing Microsoft’s Office 365 pricing and plan communications around the Copilot AI rollout misled customers about their options. The action puts the transparency of AI add-ons squarely under the consumer law microscope and continues a broader regulatory push to hold large digital platforms to the same standards as other industries. Coverage of the filings and allegations has been detailed by outlets including 7NEWS.

How customers say they were affected

The heart of the dispute is simple. As Copilot features landed, some users say renewal notices and upgrade prompts emphasized new, costlier tiers while cheaper legacy plans were hard to find or not clearly signposted. Based on court filings cited by local media, as many as 2.7 million Australians could have renewed into higher priced plans, with reported increases up to 50 dollars a year. That includes families, students, sole traders, and small businesses.

The controversy echoes a broader debate about transparency in digital services and echoes recent scrutiny of corporate responsibility in Australia, including the aftermath of the nationwide Optus outage.

What changed with Copilot and why prices moved

As reported by the Australian Financial Review, the arrival of Copilot became a pivot point for plan renewals. Many users encountered higher price points linked to AI features while legacy tiers were less prominent. For households and small firms that run on subscriptions, even modest surprises add up, especially as support sunsets nudge users toward newer, subscription-first products. That shift is already visible across the Microsoft ecosystem, including the transition away from Windows 10 support.

Microsoft’s position

Microsoft says it intends to cooperate with the investigation and that it aims to give customers clear information and choice about subscription changes. In comments reported by eWeek, the company reiterated its commitment to transparency. The court will determine whether those standards were met.

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Penalties, refunds, and what comes next

The ACCC is seeking penalties, customer refunds, and court orders that would require clearer plan disclosures across the industry. Under Australian Consumer Law, penalties for companies can be very high. Courts can consider the greater of a large fixed sum, a multiple of any benefit gained, or a percentage of turnover during the period of the conduct. The matter now moves through the court process. Timelines for hearings and any remedies will depend on the court’s schedule.

What it means for subscribers right now

There is no immediate change to your subscription while the case plays out. If you are in Australia and want to check your position, it can help to review recent renewal emails and invoices, compare available Office 365 plan options in your account, and keep records of pricing and plan changes. If you believe you were not given a clear choice, contact Microsoft support and watch for ACCC updates. If the court orders refunds or credits, instructions will be issued on how to claim.

The broader takeaway is clear. As AI becomes a standard feature in productivity software, regulators want straight pricing and plain language. Companies that get ahead of that expectation will likely avoid costly disputes. For buyers, a few minutes spent comparing plan tiers before renewal can still save real money. Those investing in new hardware for AI features may also look beyond a single ecosystem, including options like the Lenovo IdeaPad Slim 3X Copilot+ PC.

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