ACCC Takes Aim at Microsoft: Another Warning Bell for Subscription Practices

Closer to home, online practices that manipulate consumer behaviour have been squarely in the ACCC’s sights, with the Microsoft case marking the latest in a series of enforcement actions. Recent examples include:

• JustAnswer: In September this year, the ACCC instituted proceedings against JustAnswer LLC over alleged misleading representations in relation to $2 sign-up fees that converted into costly ongoing subscriptions.[3]
• Dreamscape Networks: Dreamscape Networks International Pte Ltd recently paid $56,350 in penalties for allegedly misleading consumers about two ”free” subscription-based products automatically added to purchases at the CrazyDomains online checkout. The problem in this case was that these products were represented as a ”3 months free gift” and ”1 year free gift”, but had an auto-renew feature which resulted in them being not so ”free” once the term automatically renewed and the free period ended.[4]

With the digital economy identified as an ACCC enforcement priority for 2025/2026 and Treasury’s proposed reforms targeting unfair trading practices on the horizon – as noted in our recent article “Click to cancel: subscription traps under fire” – businesses should prepare themselves for heightened scrutiny and stricter compliance expectations for subscription-based practices.

ACCC’s allegations against Microsoft

The ACCC alleges that Microsoft misled its Australian customers when communicating available options for subscription plans and impending price increases.

Specifically, the ACCC alleges that, on 31 October 2024, Microsoft announced that its new artificial intelligence feature, Copilot, would be integrated into its Microsoft 365 Personal and Family plans. This update was set to occur upon the next renewal of a subscriber’s plan and would be accompanied by increases in the subscription price. For example, the annual subscription price of:

• the Microsoft 365 Personal plan increased by 45% from $109 to $159; and
• the Microsoft Family plan increased by 29% from $139 to $179.

The announcement was directed to subscribers with auto-renewing plans and advised that, in order to continue their subscription, subscribers would need to either:

• accept the updated plan, including Copilot, at the higher price; or
• cancel their subscription before its next renewal.

However, the ACCC alleges that there was a third option – a “Classic” plan – which allowed subscribers to stay on their existing plan, at the original price, without Copilot. This alternative was not mentioned in Microsoft’s initial communications and was only revealed if a subscriber initiated the cancellation process. The ACCC alleges that this omission was deliberate and was intended to minimise the number of consumers opting-out of the updated, more expensive plans.

The ACCC contends that Microsoft:

• misled consumers about the need to accept the AI-integrated plan to continue their subscription;
• represented that the price increase was unavoidable; and
• failed to clearly disclose to consumers all of Microsoft’s available subscription options.

It is estimated that up to 2.7 million Australians were affected by Microsoft’s conduct. On 6 November 2025, Microsoft began contacting affected customers to apologise and offer refunds to eligible customers who wanted to switch subscription options. Customer refund payments are estimated to be in the millions, which will be in addition to any fines imposed by the Court. If the ACCC is successful, Microsoft will face potential penalties equal to the greater of $50 million, three times the total benefit obtained by the breach or 30% of the adjusted turnover during the breach period.

Closing the gap under the Australian Consumer Law

The Microsoft case is yet another example of behaviour that many argue falls within a regulatory “grey zone.” At the moment, the ACCC will generally only act where it can establish that conduct is false or misleading or unconscionable. However, Treasury’s proposed unfair trading practices laws seek to close this gap by introducing specific prohibitions focussed on conduct that undermines or manipulates consumer choice. Whilst Microsoft’s fate is still to be decided, the new laws will likely pave a smoother path for future enforcement action in this area.

Now is the time to review your subscription practices with particular attention to:

• the clarity of pricing and plan options;
• renewal and cancellation flows;
• transparent disclosure of subscription terms; and
• ease of access to information.

The warning is clear: if you’re not being fair and transparent to subscribers, don’t be surprised if the ACCC comes knocking.