Oct 27 (Reuters) - Australia's competition regulator on

Monday sued Microsoft ( MSFT ), accusing it of misleading

customers into paying higher prices for Microsoft ( MSFT ) 365

subscriptions after bundling its AI assistant Copilot into

personal and family plans.

The Australian Competition and Consumer Commission (ACCC)

alleged that from October 2024, the technology giant misled

about 2.7 million customers by suggesting they had to move to

higher-priced Microsoft ( MSFT ) 365 personal and family plans that

included Copilot.

After the integration of Copilot, the annual subscription

price of the Microsoft ( MSFT ) 365 personal plan increased by 45% to

A$159 ($103.32) and the price of the family plan increased by

29% to A$179, the ACCC said.

The regulator said Microsoft ( MSFT ) failed to clearly tell users

that a cheaper "classic" plan without Copilot was still

available.

The watchdog said the option to keep the cheaper plan was

only revealed after consumers began the cancellation process, a

design it argued breached Australian consumer law by failing to

disclose material information and creating a false impression of

available choices.

The ACCC is seeking penalties, consumer redress, injunctions

and costs from Microsoft Australia Pty Ltd and its U.S. parent,

Microsoft Corp. ( MSFT )

The ACCC said the maximum penalty that could be imposed on a

company for each breach of Australian consumer law was the

greater of A$50 million, three times the benefits obtained that

were reasonably attributable, or 30% of the corporation's

adjusted turnover during the breach period if the value of the

benefits could not be determined.

"Any penalty that might apply to this conduct is a matter

for the Court to determine and would depend on the Court's

findings," the regulator said. "The ACCC will not comment on

what penalties the Court may impose."

Microsoft ( MSFT ) did not immediately respond to Reuters' request

for comment.

($1 = 1.5389 Australian dollars)