Australia’s Competition Authority is suing Microsoft, saying the software giant deliberately misled 2.7 million customers about cheaper subscription alternatives when it forced its AI assistant Copilot into Microsoft 365 subscriptions, in addition to steep price increases.
The Australian Competition and Consumer Commission proceedings initiated on Sunday against Microsoft Australia and its US parent company, alleging the company provided subscribers with false information about their options after it integrated Copilot into personal and family plans on October 31 last year.
Microsoft allegedly told auto-renewing subscribers they had two choices: accept the Copilot integration at higher prices, or cancel their subscriptions entirely, the ACCC said.
The controller claims this was misleading because a third option existed: Microsoft 365 Personal and Family “Classic” subscriptions that kept all the original features without Copilot at the previous lower prices.
The only way customers could discover these alternatives was to go to the subscription section of their account, select “Cancel Subscription,” the regulator said, and go through the cancellation process until they reached a page that eventually revealed the Classic subscription option.
“After a detailed investigation, we will allege in court that Microsoft deliberately omitted reference to the Classic subscriptions in its communications and concealed their existence until subscribers had initiated the cancellation process in order to increase the number of consumers on higher-priced Copilot-integrated subscriptions,” ACCC chair Gina Cass-Gottlieb said in a statement.
Microsoft did not immediately respond Decode request for comment.
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“With this type of behavior, Microsoft risks its social contract with users, regardless of the legal outcome,” said Joni Pirovich, CEO and founder of Crystal aOS. Declutter. “An interesting avenue the ACCC could take in discovering this is to ask about the reasons why Microsoft is approving the rollout without disclosing the Classic option.”
The ACCC said consumer complaints and online discussions on Reddit revealing the hidden Classic option, along with tips to the Info Centre, played a crucial role in prompting the investigation.
The watchdog is seeking orders including fines, orders, declarations, consumer redress and costs.
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“Ideally, companies should prominently present all material options so that consumers can make informed choices without hidden steps,” even Alex Chandra, a partner at IGNOS Law Alliance, told Declutter.
“Simply making an option technically available (for example hidden in account settings or cancellation flows) is usually insufficient,” and that companies should inform users of their choices,” he added.
Microsoft is also facing a US class action lawsuit this month, with eleven ChatGPT Plus subscribers suing the company suffocated OpenAIs computer supply through a 2019 exclusive Azure agreement, artificially inflating ChatGPT prices while building competing AI products.
