Microsoft is gearing up for a landmark court battle in Australia over the way it introduced a steep price increase to millions of Microsoft 365 subscribers—and the alternative plan it kept out of view. The case, brought by the Australian Competition and Consumer Commission (ACCC), alleges that roughly 2.7 million auto-renewing subscribers were misled when the company added Copilot and jacked up annual fees by up to 45% without clearly disclosing a cheaper, feature-equivalent plan.

The dispute turns on a simple but powerful question: when a subscription gets more expensive, must the company tell you about all available options, or can it hide the budget-friendly alternative until you try to cancel?

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Microsoft’s October 2024 announcement was stark. Microsoft 365 Personal jumped from A$109 to A$159 a year—a 45 percent increase. Microsoft 365 Family rose from A$139 to A$179, a 29 percent hike. The changes coincided with the rollout of Copilot, a suite of generative-AI features baked into Word, Excel, PowerPoint, and other apps.

Customers received emails and in-app alerts that presented a binary choice: accept the new price and Copilot integration, or cancel before renewal. But there was a third door.

Hidden behind the cancellation flow were “Classic” versions of both plans. Microsoft 365 Personal Classic and Family Classic kept the pre-Copilot feature set at the old rates. According to the ACCC’s concise statement, filed in October 2025, these plans were available to the same pool of subscribers who got the price-hike messages—but they were only surfaced when a customer started to cancel. Microsoft’s defence, analysed by Australian law firm Maddocks, does not dispute the timeline or that the initial communications omitted any mention of Classic plans.

For the everyday user, this is the subscription trap in action. You see a price jump, you feel backed into a corner, and unless you stumble through the cancellation labyrinth, you never learn that a cheaper, nearly identical option exists. The ACCC isn’t arguing that Microsoft couldn’t add AI or raise prices. Chair Gina Cass-Gottlieb made that clear: businesses can change products and pricing, but they must communicate clearly enough for consumers to make informed decisions. The regulator says Microsoft failed that test.

The immediate impact is a pocketbook issue for 2.7 million Australian subscribers. If you’re on auto-renewal, there’s a good chance you’re paying more than you need to. The Classic plans preserve Word, Excel, PowerPoint, Outlook, and OneDrive without Copilot—exactly what many light users actually want. Yet Microsoft kept them out of sight, treating them as retention offers rather than equal alternatives.

Home users and families should check their accounts right now. Log into account.microsoft.com, go to Services & Subscriptions, and look at your plan name. If it says “Microsoft 365 Personal” or “Microsoft 365 Family” without “Classic,” you may be paying the higher, Copilot-inclusive price. Compare your annual charge to the old benchmarks: A$109 for Personal, A$139 for Family.

Switching is possible if the Classic option still appears. In January 2025, Microsoft published a support page acknowledging that eligible existing subscribers could switch to plans “without Copilot or AI credits” for a limited time. So while the window hasn’t officially closed, the company has signaled it won’t stay open forever. Follow these steps:

  1. Sign in at account.microsoft.com.
  2. Under Services & Subscriptions, find your Microsoft 365 plan and select Manage.
  3. Look for a link like “Other plans” or “Switch plan.” If you see Personal Classic or Family Classic, select it to revert to the old price.
  4. If the option isn’t there, you may have missed the window. Contact Microsoft Support, though prepar for mixed results—the Classic offer was described as a limited deal for cancellers.

For power users and IT administrators managing family or small business subscriptions, this case carries practical warnings about subscription design. The “hidden downgrade” is a dark pattern that regulators worldwide are scrutinizing. In its 2026–27 enforcement priorities, the ACCC has explicitly targeted “manipulative and false practices in digital markets,” including subscription traps. Even if you’re not in Australia, a loss for Microsoft could embolden regulators in the US, EU, and UK to demand that all material plan options be shown upfront when prices rise. For your own users, audit renewal emails: are you presenting a full choice set, or a curated list that nudges toward the priciest option?

Microsoft’s argument is that subscriptions evolve by nature. According to Maddocks, the company says delivering “the latest innovations as they become available is central to the subscription model.” By that logic, Copilot was just another iteration, no different from a security update or a new Excel function. The Classic plans, meanwhile, were “time-limited retention offers” meant only for those actively canceling—not genuine third plans that needed to be advertised.

The ACCC doesn’t dispute that subscriptions change. It disputes that a 45 percent price hike paired with a hidden cheaper option constitutes fair disclosure. The court will likely examine the overall impression of Microsoft’s emails. If an ordinary person read “pay A$159 or cancel,” was that misleading when a A$109 plan was available just a few clicks deeper?

Timing makes it worse for Microsoft. The ACCC’s case centers on emails sent from October 31, 2024—the initial announcement plus renewal notices at 30-day and 7-day intervals. If a subscriber renewed at the higher price during that window, a January 2025 support page touting Classic plans doesn’t undo the alleged initial omission. This is a classic consumer-law problem: an accurate detail buried later can’t fix a misleading dominant message earlier.

Microsoft also hopes to deflect responsibility from its Australian arm. The defence argues that the US parent, Microsoft Corporation, prepared the contested communications, and Microsoft Australia merely resells the service. The court’s ruling on that point could set a precedent for how local subsidiaries of global tech firms are held accountable for marketing materials generated overseas.

With a trial not expected until 2027, subscribers shouldn’t hold their breath for refunds or regulatory catharsis. But the case has already reshaped the conversation about subscription transparency. Whether or not the ACCC wins, companies are on notice: burying a cheaper plan inside the cancellation flow may not fly anymore. For now, your best defence is vigilance. Don’t assume the price on your renewal notice is your only option. Poke around your account, look for “Classic” or other plan switches, and if you don’t find one, consider whether the premium for Copilot is worth it—or whether it’s time to explore alternatives like Google Workspace or LibreOffice.

The Federal Court showdown will be a slow burn, but it’s one that every Microsoft 365 subscriber should watch. When subscriptions become moving targets, clear communication isn’t just a courtesy—it’s a legal obligation.