Hidden “Classic” Plans and Price Hikes
The ACCC claims Microsoft didn’t clearly inform its Australian subscribers about a cheaper “Classic” plan that didn’t include Copilot. Instead, users were allegedly pushed toward pricier AI-integrated subscriptions. The watchdog alleges Microsoft concealed the Classic plans, making them visible only when users tried to cancel.
ACCC Chair Gina Cass-Gottlieb said 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.”
The price hikes were significant—annual fees for Microsoft 365 Personal rose by 45%, and Family plans by 29%. You can read the ACCC’s official media release for full details.
Alleged Breaches of Consumer Law
The ACCC is accusing Microsoft of violating several provisions of the Australian Consumer Law, including:
- Section 18 – misleading or deceptive conduct
- Section 29(1)(i) – false or misleading representations about prices
- Section 29(1)(l) – misrepresenting the need for services
- Section 29(1)(m) – false representations about rights or benefits
In plain terms, the ACCC says Microsoft misled consumers into thinking they had to upgrade to the Copilot plans or cancel entirely. According to the commission’s statement, Microsoft’s communications “conveyed that consumers had to accept the more expensive Copilot-integrated plans, and that the only other option was to cancel.”
The ACCC is seeking consumer redress, financial penalties, injunctions, declarations, and costs. A court ruling against Microsoft could have serious financial consequences.
For more on consumer protection, visit the ACCC’s consumer rights page.
How the Investigation Began
The ACCC’s probe was sparked by consumer complaints and online discussions on forums like Reddit. User feedback helped regulators uncover the hidden Classic plans. Insights from PPC.LAND’s Infocentre also played a key role in tracing how Microsoft structured its cancellation flow.
The case focuses only on Microsoft 365 Personal and Family plans—business and enterprise subscriptions aren’t part of the action. The ACCC is targeting both Microsoft Corporation (the U.S. parent company) and Microsoft Pty Ltd (its Australian arm).
What This Means for Subscriptions and AI Integration
This case could reshape how subscription-based businesses communicate pricing and plan options. It highlights concerns around transparency, consumer autonomy, and the influence of large tech providers over user decisions.
As AI becomes more embedded in everyday tools, regulators may demand clearer disclosure of alternatives—especially for customers who don’t want or need AI-powered features tied to higher costs.
The Federal Court’s ruling will determine whether Microsoft violated Australian Consumer Law. If the ACCC wins, it could set a precedent requiring tech companies to disclose all available plans upfront when introducing paid AI upgrades.
