Today, the Australian Competition and Consumer Commission (ACCC) filed a lawsuit in the Federal Court, alleging that Microsoft Australia and its parent company, Microsoft, engaged in misleading marketing by concealing key information from nearly 2.7 million Australian users when integrating Copilot, an artificial intelligence assistant, into Microsoft 365 services.
The ACCC alleges that, starting October 31, 2024, Microsoft sent notifications to auto-renewing users stating that to maintain their subscriptions, they must accept a higher-priced plan that includes Copilot or cancel their subscriptions. However, the regulator considers this statement misleading because users actually have a third option: to continue using the "Classic Plan" without Copilot at the original price.
Notably, Microsoft did not mention the existence of the "Classic Plan" in its communications; users only saw this option when they attempted to cancel their subscriptions. The ACCC argues that this practice deprived users of their right to be informed, forcing them to unknowingly accept price increases or abandon their subscriptions.
This lawsuit highlights the controversy over transparency among tech giants regarding subscription services. The ACCC emphasizes that companies must clearly inform users of all available options and avoid exploiting information asymmetry to influence consumer decisions. Microsoft has not publicly responded to the allegations, but a loss could result in significant fines and policy adjustments.
The case has also heightened scrutiny of global regulation of the subscription economy, potentially prompting stricter consumer protections. The case is currently before an Australian court, and the outcome could have far-reaching implications for business practices in the tech industry.
