Microsoft facing huge lawsuit involving millions of citizens over unfair software pricing - here's what we know

• Microsoft facing Australian lawsuit over unfair software pricing
• ACCC suit alleges Microsoft 365 users were not told of cheaper options
• As many as 2.7 million users could be affected

Microsoft is being sued by the Austrialian consumer watchdog for allegedly misleading millions of users regarding its Microsoft 365 platform.

The Australian Competition & Consumer Commission (ACCC) says the company advised users stick to an auto-renewal deal on their Microsoft 365 package, despite cheaper or more useful offers being available.

As many as 2.7 million users of Microsoft 365 Personal and Family plans could have been affected, and could now be in for a share of a payout if the case is successful.

Microsoft 365 pricing lawsuit

The ACCC complaint alleges Microsoft failed to offer appropriate advice to users after adding its Copilot AI platform into the 365 platform in Australia back in October 2024.

Users with a Microsoft 365 Personal of Family plan were allegedly told this integration of Copilot would mean they would have to pay a higher price if they wanted to keep their existing subscription.

However in its complaint, the ACCC says Microsoft provided users with "false or misleading" information, because there was an undisclosed third option - the Microsoft 365 Personal or Family Classic plans, which allowed subscribers to retain the features of their existing plan, without Copilot, at the previous lower price.

The ACCC notes the company did send out two emails and published a blog post informing auto-renewal subscribers of the new integration, including information on the price prices - but apparently failed to mention alternative plans were available, and the users themselves would have no way of discovering their existence unless they actively started the process of cancelling their subscription.

The complaint notes that these were not small price rises either - as the annual subscription price of the Microsoft 365 Personal plan increased by 45% from AU$109 to AU$159, and the Microsoft 365 Family plan increased by 29% from AU$139 to AU$179.

“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," noted ACCC Chair Gina Cass-Gottlieb said.

“We’re concerned that Microsoft’s communications denied its customers the opportunity to make informed decisions about their subscription options, which included the possibility of retaining all the features of their existing plan without Copilot and at the lower price,” Ms Cass-Gottlieb said.

“We believe many Microsoft 365 customers would have opted for the Classic plan had they been aware of all the available options.”

The ACCC says it is seeking orders "including penalties, injunctions, declarations, consumer redress, and costs", and notes the maximum penalty for each breach of the Australian Consumer Law is above $50 million, meaning Microsoft could be facing an expensive payout if the case is successful.

TechRadar Pro has contacted Microsoft for comment.

The company is also facing a multibillion-pound legal claim in the UK over alleged anticompetitive behavior and unfair software licensing practices, and is currently engaged in a long-running dispute with ValueLicensing over selling pre-owned Office and Windows licenses.