In October 2025 the Australian Competition and Consumer Commission commenced Federal Court proceedings against Microsoft Australia and Microsoft Corporation over the way subscription options were communicated to roughly 2.7 million Australian subscribers of Microsoft 365 Personal and Family plans. Microsoft filed its defence in 2026 and is contesting the case. Nothing has been decided, and every claim in it remains an allegation until the court rules.
Frontrow's interest here is practical rather than legal. The case concerns consumer plans, not business subscriptions, but it puts a sharp question in front of every organisation heading into a renewal: do you actually know all of the plan configurations available to you, including the ones without AI add-ons? This guide sets out the facts of the case neutrally, what it does and does not touch, and the renewal questions worth borrowing from it.
What the case is about
After Copilot was integrated into Microsoft 365 Personal and Family plans, the annual price of Personal moved from $109 to $159, a 45 per cent increase, and Family from $139 to $179, a 29 per cent increase, according to the ACCC's filing. The ACCC alleges that from 31 October 2024, subscribers with auto-renewal enabled were told they could either accept the Copilot integration at the higher price or cancel their subscription.
The ACCC further alleges there was a third option: Classic versions of the Personal and Family plans that kept the existing features, without Copilot, at the previous price. Its case is that these Classic plans were not referenced in the renewal communications and only became visible to subscribers part-way through the cancellation flow. The regulator is seeking penalties, injunctions, declarations, consumer redress and costs.
Microsoft, for its part, began contacting affected subscribers in November 2025 with an apology and refund arrangements, and its 2026 defence contests the ACCC's characterisation of the renewal communications. Legal commentary suggests the contest will centre on when a subscription provider must volunteer alternative plan options in its communications, a question the Federal Court has not yet answered. Until it does, the allegations are just that.
What the case does not touch
The proceedings concern Microsoft 365 Personal and Family, the consumer plans bought with a personal Microsoft account. Business subscriptions sit outside the case entirely, and they are structured differently in the way that matters most here: Microsoft 365 Copilot has never been bundled into the price of a business plan. It is a separate, opt-in add-on licence, and no business plan renews with Copilot silently included.
That distinction is easy to lose in the headlines, and Frontrow has had clients ask whether their business tenancy was caught up in the case. It is not. If your organisation pays for Copilot today, someone in your organisation chose to add it.
The Copilot-free business options, as they stand
Every mainstream business plan remains available without any Copilot add-on: Business Basic, Business Standard and Business Premium for organisations up to 300 seats, and the Enterprise plans above that. Copilot Chat, the free tier, is included with a work account at no extra cost, so declining the paid add-on does not mean declining AI outright.
For organisations that do want the paid product, Microsoft's Australian pricing page currently lists the choice explicitly: Microsoft 365 Copilot Business as an add-on at $26.91 AUD per user per month paid yearly excluding GST under promotional pricing to 30 September 2026, and bundled options such as Business Standard with Copilot at $35.20 AUD and Business Premium with Copilot at $47.90 AUD per user per month paid yearly excluding GST (checked August 2026). The with-Copilot and without-Copilot configurations sit side by side, and either is a legitimate renewal position.
The renewal questions worth borrowing
Whatever the court eventually decides, the case is a reminder that renewal time is when plan configurations deserve an explicit look. Licensing is genuinely complex, and the buyers who do best are the ones who ask direct questions. Before your next renewal, put these to your provider or partner:
- Which plan configurations are available at our seat count, with and without AI add-ons, and what does each cost per user per year?
- Which add-ons on our current bill are opt-in, when were they added, and who is actually using them?
- If we decline or remove an add-on at renewal, what functionality do staff keep through included tiers such as Copilot Chat?
- Are any of our prices promotional, and what do they step up to when the promotional period ends?
- What changes at our next size threshold, whether that is the 300-seat Business plan ceiling or enterprise agreement bands?
None of those questions assumes anything improper on anyone's part. They are simply the discipline that stops an organisation paying for capability it has not consciously chosen, in either direction: some businesses under-buy Copilot for roles that would repay it, and some carry licences nobody uses.
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