Microsoft has been taken to court for sneaking AI software into packages millions are already paying for – and then hiking the price. Australia’s competition watchdog alleges Microsoft added its AI assistant Copilot to existing packages, increased the subscription cost of the “AI-upgraded” plans, hid the cheaper AI-free “Classic” alternative, and indirectly pushed users into adopting the software at extra cost. Regardless of the trial’s outcome, we’re seeing a glimpse into the future direction of travel for tech giants: expand AI, add it for free to existing software, call it the new “standard”, charge more money, and make it difficult to opt out. Is this a sign of things to come?
Why Microsoft May Only Be the Beginning
From late 2024, Microsoft bundled Copilot into Microsoft 365 Personal and Family plans and raised renewal prices. Users report being told they only had two options – to pay more and keep their plan, or cancel entirely – and were not offered the third choice of simply continuing without the AI add-on.
There was indeed a third lower-cost “Classic” option which excluded Copilot, but this was only offered to customers when they attempted to cancel. Australia’s regulator calls it misleading by omission and is seeking penalties as well as customer redress.
But it’s about more than just one company. Bundling AI is becoming a new pricing lever, whether or not you use or even trust the software. As time progresses, we will see fewer and fewer AI-free options as prices continue to rise for regular customers. Will people refusing to adopt the software eventually lose access to standard work applications like Word, Excel and more unless they submit?
How Much It’s Worth to Microsoft, and What It Could Cost Them
The regulator says around 2.7 million Australians on Microsoft 365 were funnelled towards the higher “AI-upgraded” plans after Copilot was bundled in. Prices jumped from $109 to $159 per year for Personal subscribers and from $139 to $179 for Family – a jump of 30-45%. The cheaper “Classic” plan without Copilot only appeared if people sought to cancel, meaning many auto-renewing users accepted the higher price without ever seeing the no-AI option at all.
If the court finds Microsoft misled customers deliberately, penalties under Australia’s consumer law can be enormous. For corporations, the maximum is the greater of either:
- $50 million
- 3x the value of any benefit gained from the conduct
- 30% of adjusted turnover during the breach period
On top of fines, the regulator is seeking injunctions, consumer redress such as refunds or bill credits, corrective notices, and costs. In similar cases, courts have also ordered compliance programs and clearer disclosure in future renewals.
The Coming Wave: What to Watch for Next
Step one is to bundle the software into baseline packages before hiking prices and, when enough users roll over to the new plan, retire the old AI-free options entirely. Soon, non-AI related suites won’t even exist.
Becoming omnipresent whether you want it or not, automation is baked into writing, slideshow and spreadsheet software options. In browsers, AI summaries, auto-translations and digital assistants are folded into toolbars, and creative tools are increasingly “generative” by default. Cloud networks and file storage are included too – with automated security scans and transcription functionalities becoming the norm.
Microsoft has revealed a sneaky trick that we may see more in future: imply that only two options exist, knowing most people won’t or can’t cancel, so would never enter the cancellation flow and find the elusive third choice. With millions on auto-renew, most simply accepted the new price without trying to find the Classic option. And that unethical push is what Australia’s watchdog wants to see punished.
Are We Paying for AI Even If We Don’t Use It?
Tech giants included software for free as they trialled it on the masses. Many providers offer free or test versions, and most introductory rollouts came without a cost. But now the meter is running – the backlog of training costs, data centre builds and operational expenses need recovering from somewhere, and the fastest way to recoup their costs is to build it into what millions are already paying for, and pretending there’s no other choice.
Previously, we covered how You’re Paying for AI Whether You Like It or Not based on the real cost of developing the software and how the expense is spread across populations. But here, we’re also seeing how it affects product prices too.
The Loss of Choice
Innovation should be rewarded, and there may be specific ways in which the development of AI software could improve day-to-day lives. But adding it into a product most people are tied to for work or school and then covering up the AI-free path and asking for more money, is simply a shady pricing tactic. If the software were truly adding value, vendors should be proving it with clear side-by-side choices at renewal, with transparent feature lists, and not need to slide it into existing products against users’ will.
Look out for software providers telling you they’re “improving your plan” with a higher price attached. Check how the plan structure changes over time, and legacy options with lower tech are removed from platforms. For now, it’s Microsoft, but it won’t stop with them.
Final Thought
AI is expensive. As it becomes the default option in future, we will be forced into paying more even for basic functionality as the increased costs are split across platforms. If there’s an honest shift towards automated workflows and improved productivity, customers will be paying for genuine gains. But if it’s sneakily engineered through hidden options, millions will be forced into paying for features they don’t want or trust. Australia’s case against Microsoft is a one-off for now, but will set the tone for how other tech giants approach future tech roll-outs.
Join the Conversation
Is this just the beginning? Should we expect more hidden charges to cover the increased costs of AI development, even if we don’t use the software itself? What are you doing about it? Share your thoughts below.
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