Australia sues Microsoft over ‘misleading’ AI proposals

Australia’s competition watchdog on Monday accused Microsoft of misleading people into paying for its AI assistant Copilot.

The authorities have announced that they have filed a lawsuit in the Federal Court against Microsoft Australia and its parent company Microsoft Corporation.

The software giant is accused of making “false or misleading” statements about the approximately 2.7 million Australians who subscribe to auto-renewing Microsoft 365 plans, which include a range of online Office services.

Microsoft allegedly told customers they had two options: pay extra for Microsoft 365 services integrated with Copilot or cancel their subscriptions entirely.

However, the Australian Competition and Consumer Commission said in a statement that there was a partially hidden third option – only visible when people started canceling – to continue using their existing ‘classic’ plan at the original price without Copilot.

“Microsoft intentionally omitted any mention of the Classic plan in its communications and hid its existence until subscribers initiated the cancellation process in order to increase the number of consumers on the more expensive Copilot integrated plan,” said Committee Chair Gina Kathgottlieb.

“The Microsoft Office apps included in a 365 subscription are essential to many people’s lives, and given the limited alternatives to bundled packages, canceling a subscription is not a decision many people make lightly.”

The commission accused Microsoft of misleading subscribers about individual and family plans starting October 31, 2024.

Annual subscriptions for Microsoft 365 plans that included Copilot were 29 to 45 percent more expensive than those that didn’t, according to the watchdog group.

The commission is seeking penalties, injunctions, consumer relief and costs.

Microsoft could be fined more than AU$50 million (US$30 million) for each infringement.

Microsoft did not immediately respond to AFP’s request for comment.

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