Tech giant Microsoft is facing hefty fines for allegedly misleading millions of Australian customers by trying to convince them to pay more than needed for an AI upgrade.

Australia's consumer watchdog has taken the US company to court for allegedly leading customers to believe they must either pay extra subscription fees when its AI assistant Copilot was integrated into their package or cancel altogether.

But subscribers also had the choice of maintaining their previous plan with the AI assistant at the same price, the Australian Competition and Consumer Commission said in the Federal Court case.

Around 2.7 million Australians received the emails, which said a Microsoft 365 personal account would auto-renew at $159 for a one-year subscription if the customer did not cancel.

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