GLOBAL – Microsoft is facing legal action in Australia for allegedly misleading millions of its customers regarding the pricing of its artificial intelligence (AI) assistant, Copilot, when bundled with Microsoft 365 subscriptions. The Australian Competition and Consumer Commission (ACCC) filed a lawsuit in the Federal Court on Monday, 27 October 2025, alleging the tech giant engaged in deceptive conduct.

The ACCC claims that Microsoft failed to inform approximately 2.7 million Australian subscribers of its Personal and Family plans that they had the option to continue with their existing subscriptions at a lower price without the AI features. Instead, communications from the company allegedly presented only two choices: accept the integration of Copilot with a significant price increase or cancel the subscription altogether.

According to the consumer watchdog, a third, undisclosed option—a “Classic” plan—allowed customers to retain their original plan features and pricing without the Copilot addition. This option was only revealed to customers after they had already initiated the cancellation process.

“We will allege in Court that Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process to increase the number of consumers on more expensive Copilot-integrated plans,” ACCC Chair Gina Cass-Gottlieb stated on Monday.

The price hikes in question were substantial. The annual cost for a Microsoft 365 Personal plan in Australia rose by 45% from AUD $109 to AUD $159, while the Family plan increased by 29% from AUD $139 to AUD $179 following the Copilot integration from 31 October 2024.

Implications for Kenyan Consumers and Regulation

While this legal challenge is unfolding in Australia, it serves as a significant case study for Kenya and the broader East African region, where the adoption of AI technologies is accelerating. The core of the ACCC's lawsuit—transparency in pricing and consumer choice when AI is bundled with existing software—is a matter of global relevance.

In Kenya, there is currently no specific legislation that directly regulates artificial intelligence. The country relies on existing frameworks like the Consumer Protection Act, 2012, and the Data Protection Act, 2019, to govern aspects of digital services. These laws prohibit false or misleading representations and mandate clear consent for data processing, principles that are pertinent to the Microsoft case. However, experts note that these laws were not designed to address the unique challenges posed by AI, such as algorithmic transparency and automated decision-making.

The Kenyan government is taking steps to address this gap, having launched a National AI Strategy for 2025–2030 and drafted a Code of Practice for AI applications. The outcome of the ACCC's lawsuit against Microsoft could influence how Kenyan regulators approach consumer protection in the context of AI, particularly concerning bundled services and opaque pricing structures.

Microsoft's Response and Broader Context

Microsoft has acknowledged the lawsuit and stated it is reviewing the ACCC's claim. A spokesperson for Microsoft Australia said, “Consumer trust and transparency are top priorities for Microsoft. We remain committed to working constructively with the regulator and ensuring our practices meet all legal and ethical standards.”

The ACCC is seeking penalties, consumer redress, injunctions, and legal costs. The lawsuit alleges that Microsoft's conduct breached multiple sections of the Australian Consumer Law, including prohibitions against misleading conduct and making false representations about prices. The legal proceedings concern only the Personal and Family plans and do not involve business or enterprise subscriptions.

This case highlights a growing global scrutiny of how major technology companies market and price AI-powered enhancements to their products. For Kenyan consumers and businesses who use Microsoft 365 and are likely to encounter similar AI integrations, this lawsuit underscores the importance of carefully reviewing subscription changes and demanding clarity on available options. As Kenya develops its own AI governance framework, the principles of consumer choice and transparency at the heart of this Australian case will be critical considerations.