Microsoft sued for misleading millions of customers into paying a 45% increase for AI add-ons.
Australia’s competition regulator sued Microsoft, alleging it misled around 2.7 million users into paying up to 45% more in subscription prices for Microsoft 365 because of its AI integration. But there’s more to this story than just money.
Why is Australia suing Microsoft?
According to the ACCC, since October 2024, Microsoft has misled users by suggesting that they had to switch to the more expensive Microsoft 365 Personal or Family plan while failing to clearly inform users that the cheaper “classic” plan, without its AI called Copilot, was still available.
The regulator said that only when customers started the cancellation process, it was revealed that they could still keep the cheaper plan that excluded AI, and did not have to switch to a much more expensive 365 plan and opt-in to the Copilot.
According to the ACCC, only when users decided to cancel their Microsoft 365 Personal and Family plans, a third option to keep their current plan without AI was given. Image: Australian Competition and Consumer Commission.
According to the watchdog, Microsoft’s design is a breach of Australian consumer law because users were only given the option to keep the cheaper plan once they had started the cancellation process. Additionally, the tech giant’s prior communications via two emails and a blog post did not mention that users could stay with the cheaper plan. Instead, the communication conveyed the message that users had to accept the more expensive plan with Copilot or cancel the plan.
For these users, the annual subscription for the Microsoft 365 personal plan increased by a substantial 45% from $109 to $159 and included Copilot. For users with annual subscriptions to the Microsoft 365 family plan, there was a 29% increase from $139 to $179.
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,”ACCC Chair Gina Cass-Gottlieb said.
Because of this misleading strategy to get users to pay more and upgrade to plans with Copilot, the ACCC is seeking penalties, injunctions and costs, and consumer redress from Microsoft Australia Pty Ltd and the U.S. parent, Microsoft Corp.
Why is this a problem?
There are several issues when you think about Microsoft getting sued by the ACCC for misleading users to switch to more expensive plans that also opt-in to its artificial intelligence tool, even if you ignore the price hike for a moment:
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Exploiting your data: Microsoft is a Big Tech known for collecting user data. With the excessive collection of user data it has, it is able to develop tools like its Copilot AI.
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Paying more for AI: Microsoft tries to push users into upgrading to more expensive plans with AI features enabled. While the user might not even want the AI, they are forced onto the new plans through misleading and non-transparent communication tactics by Microsoft.
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Big Tech benefits: This tactic boosts profits for Microsoft and helps it to further improve its AI models: The more people use it, the more data is there to train the tool.
You use Office 365, and Microsoft uses your data
When anyone uses Microsoft tools and products like those included in personal and family 365 plans, user data is collected and processed – the type of data and processing is dependent on the region and Microsoft product. This is common practice for Microsoft and other tech giants like Google and Meta. They make huge profits and greatly benefit from collecting user data, selling it to third parties, and posting targeted advertisements. And today, tech giants also use your data to train their AI models.
With some Microsoft-owned products, your data is collected and used for AI training, often without you knowing. For example, Microsoft will soon start using LinkedIn data from users in the EU, EEA, and Switzerland to train its AI models, unless its users choose to opt out. So by default, Microsoft decides for its users that their data will be used – without politely asking them for permission. Unfortunately for LinkedIn users in Australia, the privacy policy was already updated in 2024 to automatically opt users in to allow having their data used for training AI models. This automatic opt-in is not limited to Microsoft; it’s very common play for Big Techs. For example, this year Meta also opted user into having their public data used for AI training.
Big Techs use such sneaky opt-in methods that do not give users a fair choice to improve their AI tools across all platforms.
But back to the story at hand: As claimed by the ACCC, Microsoft failed to mention that the cheaper family and personal Microsoft 365 plans would remain in its 2024 price increase announcement. Instead, the information that users received suggested that the price increase would apply at the next auto-renewal. This made users believe they had to upgrade to a way more expensive plan that came with Microsoft’s artificial intelligence tool, Copilot. They were not given a fair chance to make an informed decision.
Many users have taken to Reddit to share their frustrations of how Microsoft went about adding Copilot to their plans.
Similar to this, was the outcry of users earlier in 2025 when Microsoft stopped offering free accounts to NPOs. This common trick - give a tool away for free, let people get used to it, and then take the free version away and force them to pay – works wonders for Big Tech, but makes customers feel mistreated and cheated on.
Considering how individuals and families rely on 365 tools like Microsoft Word, Microsoft Drive, and Microsoft Excel, it’s likely Australian users would feel pressured to accept the new price and opt into the AI add-ons. If they didn’t, it could be assumed that their whole subscription would be canceled.
Unfortunately, this is quite a common big tech practice: suck the user into using a product and make them depend on it, increase the costs later on, and then trick them into believing they have no choice but accept and pay, or cancel the subscription.
The solution
In this case, users must ask themselves, Why do I pay to use a product that collects my data and then tries to trick me into paying more and opt into its AI tools? Luckily, there are better alternatives available today, and contrary to popular belief, it is possible to replace popular Microsoft tools as Niclas Lahmer from the IAGO GmbH explains, and even replace Google by DeGoogling!
While it has long been a trend to deGoogle, the behavior of Big Tech makes more and more people and businesses to look for alternatives to achieve digital sovereignty to free themselves from the sales tactics of Big Tech.
Privacy-respecting open source alternatives to replace popular Microsoft 365 products.
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Microsoft Word, Excel, and PowerPoint can be replaced with LibreOffice, a private and free alternative.
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Outlook can be replaced with Tuta Mail, the best Outlook alternative that’s free to use, private, and secure.
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Replace Outlook Calendar with Tuta Calendar to enjoy true control and privacy over your schedule.
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Replace OneDrive with the Tuta Drive (coming soon!)
Meet the Tuta team!
The Tuta Team! (Minus a few).
Hi! We’re the Tuta team, a group of privacy enthusiasts based in Germany on a mission to make the web a better place, one encrypted email at a time.
We develop Tuta, the end-to-end encrypted email and calendar provider, offering quantum-proof email and calendars for free to everyone around the world. If you’re tired of Big Tech and are interested in being more conscious with the tools you use, you have come to the right place.
Happy encrypting! 🔒
