If you look at what happened with this latest legal issue for Microsoft you might also think that this tactic is used by many other smaller software companies.
All Microsoft did was to OMIT the option to maintain your Microsoft Office 365 Subscription without paying any extra costs.
Microsoft’s “Copilot” Pitch Backfires: ACCC Finds Tech Giant Misled Australians Over AI Subscription Plans
In a landmark ruling that underscores the growing global scrutiny of “dark patterns” and unclear pricing in the tech industry, the Australian Competition and Consumer Commission (ACCC) has successfully prosecuted Microsoft for engaging in misleading conduct.
The case centred on the software giant’s aggressive promotion of its new AI-powered “Copilot” subscription plans, which allegedly pressured users into upgrades by omitting a crucial piece of information: they could simply stay on their existing, cheaper plan.
The “Upgrade” Pressure Campaign
The controversy began in early 2024 as Microsoft rolled out its Copilot AI features—tools designed to integrate generative AI into core products like Windows, Microsoft 365, and Edge. The marketing campaign was pervasive, targeting Australian consumers and businesses through
- in-app notifications,
- emails, and
- prominent banners within account dashboards.
The ACCC’s investigation found that these communications heavily emphasised the benefits and necessity of the new Copilot Pro or Microsoft 365 Copilot plans, often framing them as the natural, next-step evolution of the user’s software suite.
The messaging created a sense of urgency and inevitability, suggesting that to access the latest features and maintain a “complete” experience, an upgrade was essential.
The critical omission, as ruled by the Federal Court of Australia, was the failure to clearly disclose that users’ current subscriptions—such as Microsoft 365 Basic or Personal—would remain fully functional and supported.
The AI features were an optional, premium add-on, not a mandatory update.
This lack of transparency left many Australians with the mistaken impression that their existing software might become obsolete or significantly degraded if they did not pay for the more expensive Copilot tier.
The ACCC’s Stance: A Win for Consumer Clarity
ACCC Chair Gina Cass-Gottlieb was unequivocal in her assessment. “This case sends a strong message to digital platforms and software providers that when promoting new products, you must not mislead consumers about their choices,” she stated.
“Businesses must be clear and upfront about pricing and the options available to consumers. Misleading consumers about the need to upgrade to a more expensive subscription to access certain features denies them the opportunity to make an informed choice.”
The ACCC argued that Microsoft’s conduct exploited the “status quo bias”—a tendency for people to prefer things to stay the same—by making the path of least resistance a costly upgrade, while obscuring the simpler, cost-free option of maintaining their current plan. This practice falls into the category of manipulative design or “dark patterns,” where interface choices are used to subvert or hinder user autonomy.
Penalties and Broader Implications
The Federal Court ordered Microsoft to pay a substantial penalty of $10 million AUD, a sum intended to reflect the serious nature of the breach of Australian Consumer Law. Beyond the fine, the court also mandated that Microsoft implement a corrective advertising campaign and establish a comprehensive compliance program to prevent similar conduct in the future.
The ruling has resonated far beyond Australia’s shores. It arrives amidst increasing regulatory action worldwide targeting the subscription models of major tech companies. From the European Union’s Digital Services Act to various consumer protection actions in the United States, authorities are cracking down on practices that make it easy to subscribe but difficult to unsubscribe, or that use ambiguous language to drive sales.
For the tech industry, the Australian verdict is a clear warning. As companies race to monetise generative AI—often by bundling it into new, higher-priced subscription tiers—they must navigate a fine line between promotion and deception. Transparency is no longer a nice-to-have; it is a legal requirement. The excitement around “must-have” AI features does not absolve companies from their fundamental duty to present choices fairly and honestly.
Lessons for Consumers and the Industry
For consumers, this case is a reminder to approach “required upgrade” messages with scepticism. It pays to look for the “skip” or “see plans” option in fine print, to directly review one’s account settings, and to remember that staying on a current plan is almost always a valid choice.
For Microsoft and its peers, the path forward involves designing user communications that empower rather than pressure. As AI becomes further embedded into software, the value proposition must be clear, and the customer’s right to opt-out without penalty must be even clearer. The age of assumed consent and obscured alternatives is rapidly closing, replaced by a new standard where informed choice is the cornerstone of the digital customer relationship.
The ACCC’s conviction of Microsoft is more than a local compliance issue; it is a global benchmark. It affirms that in the bustling marketplace of AI innovation, the oldest rules of commerce still apply: honesty is the best policy.
See the Concise Statement below..
How The Career Academy Misled Students
There is an example of misleading customers in our Online Business Admin Course which covers claims made by Daniel Hunt and The Career Academy in NZ. It is important to be genuine in the way to try to get new customers as well as how you treat existing customers.
In our Business Admin course we go into the details about Daniel Hunts claims because they affect the claims that small businesses make in their marketing. Legal aspects of your digital marketing include:
- Your Code of Conduct
- Disclaimers
- Terms and Conditions
See the Online Business Admin Course contents
How you can Master Microsoft Office 365
The reason that this case against Microsoft is so important is because Microsoft is still the market leader in Office Administration and Productivity Software.
Master these skills in our Online Microsoft Office Courses
