Australia's competition watchdog has taken Microsoft Corp. (NASDAQ:MSFT) to court, alleging the company misled millions of customers into paying more for its Microsoft 365 subscriptions after bundling them with its artificial intelligence tool, Copilot.
Regulator Alleges Microsoft Misled Consumers
On Monday, the Australian Competition and Consumer Commission filed a lawsuit accusing Microsoft of deceptive conduct that affected about 2.7 million users, reported Reuters.
The regulator claims that beginning in October 2024, Microsoft gave customers the impression they had to upgrade to higher-priced Microsoft 365 personal and family plans that included Copilot.
The ACCC said Microsoft failed to make it clear that a cheaper "classic" plan without Copilot was still available for users.
A Microsoft spokesperson told the publication that the company is reviewing the ACCC's claim in detail.
Microsoft did not immediately respond to Benzinga's request for comments.
AI-Driven Price Hikes Spark Legal Challenge
Following the integration of Copilot, the annual price of Microsoft 365 personal plans rose 45% to A$159 ($103.32), while family plans increased 29% to A$179, the regulator stated.
The ACCC said it is seeking penalties, consumer redress, injunctions, and costs against Microsoft Australia Pty Ltd and its U.S. parent company.
If found guilty, Microsoft could face fines of up to A$50 million per breach or 30% of its adjusted turnover during the violation period, the report said.
Microsoft's AI Momentum Faces Scrutiny
The lawsuit comes as Microsoft surged 25.09% year-to-date—outpacing the S&P 500's 15.73% gain during the same period, according to Benzinga Pro.
Last week, it was also revealed that CEO Satya Nadella's annual compensation has climbed 22% to $96.5 million, a feat closely linked to the tech giant’s stock performance.
In July, Microsoft posted quarterly earnings and revenue that exceeded expectations, with sales climbing 18%—its fastest growth in more than three years.
The company is scheduled to report its next earnings on Oct. 29.
Benzinga's Edge Stock Rankings position MSFT in the 97th percentile for Growth, highlighting its strong long-term fundamentals and high investor confidence. Click here to see how it stacks up against its peers.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
