Australia Sues Microsoft Over Alleged Hiding of Cheaper Microsoft 365 Plans

The Australian Competition and Consumer Commission (ACCC) has launched a significant lawsuit against tech giant Microsoft, alleging the company engaged in anti-competitive practices by obscuring cheaper Microsoft 365 subscription plans that don't include its AI-powered Copilot features. Filed on October 25, 2025, in the Federal Court of Australia, the suit claims Microsoft effectively funneled consumers and businesses towards more expensive, AI-integrated options through its interface design and promotional strategies. This isn't just about bundling; it's about transparency, or the alleged lack thereof.

The Core of the Allegations: Hidden Choices and Inflated Costs

At the heart of the ACCC's complaint is the assertion that Microsoft's sales portals and promotional materials de-emphasized or outright "hid" more affordable alternatives. For instance, customers could still opt for Microsoft 365 Business Basic, which offers core productivity tools like email, cloud storage, and Teams, for a modest AUD 8.80 per user per month. A sensible price, wouldn't you say? Yet, the ACCC argues that post-Copilot's general release, these budget-friendly options became incredibly difficult to locate, buried deep in sub-menus or simply not advertised.

Compare that to the Copilot-integrated plans. Microsoft 365 Business Premium with Copilot starts at AUD 33.00 per user per month – a staggering 275% premium over the Basic plan. For larger enterprises, the E3 plan with Copilot climbs to AUD 55.00. The ACCC estimates Australian businesses might have collectively overpaid by AUD 500 million in 2025 alone due to this alleged steering. That's a huge sum, and it certainly highlights the potential financial impact on thousands of companies, particularly small businesses.

Microsoft's Defense and the ACCC's Firm Stance

Unsurprisingly, Microsoft has moved to deny the allegations, filing an initial response requesting a dismissal. In an official statement, the company asserted, "We disagree with the ACCC's claims and believe our pricing is transparent and competitive. Customers have full access to all plan options, and Copilot provides significant value for productivity. We will defend our practices vigorously."

However, ACCC Chair Gina Cass-Gottlieb remains resolute. During her press conference, she emphasized that "Microsoft's interface design misleads users by prioritizing AI-bundled plans, limiting choice and inflating costs for Australian consumers. This is about ensuring fair competition in the AI era." It's clear the regulatory body believes this isn't merely a marketing dispute, but a critical competition issue affecting market dynamics in the rapidly evolving AI landscape. The Australian Small Business and Family Enterprise Ombudsman has also chimed in, noting significant "confusion" among SMEs regarding plan options.

Broader Implications and Upcoming Developments

This lawsuit marks another significant moment in the global scrutiny of Big Tech, especially concerning AI integration. It mirrors, but also distinguishes itself from, past antitrust cases like the EU's unbundling of Teams from Office. Here, the focus is on "hidden" pricing and choice suppression rather than outright forced bundling. Is this a new frontier for antitrust enforcement? Many experts think so. Tech analyst Ming-Chi Kuo has already labeled it a "wake-up call for AI monopolies," suggesting potential fines could reach AUD 1 billion if the ACCC prevails.

The preliminary hearing is set for November 15, 2025, a date many in the tech world are now marking on their calendars. And there's more: the European Commission has reportedly expressed interest in parallel probes, indicating this Australian action could have global ripple effects. It seems users are fed up too; online forums are buzzing with frustrations about "Microsoft forcing Copilot down our throats," with many wondering why they should pay extra for AI they simply don't need. Microsoft did announce minor UI tweaks to "improve plan visibility" amid the lawsuit, but critics are quick to call it insufficient.

The lawsuit underscores how deeply AI is becoming embedded in core productivity tools, and how regulators are grappling with ensuring competitive markets amidst rapid technological advancement. This will definitely be one to watch.