The AI Tax on Your Software Bill — and How to Cut It

Your software bill went up. AI you didn't ask for is why

Your Microsoft 365 renewal came in up to 45 per cent higher, and the reason was an AI assistant you never asked for. That is the heart of a case the Australian competition regulator is now running in the Federal Court — and whatever the verdict, the pattern behind it is already on your bill. Across the software your business rents every month, vendors are folding in AI features and lifting the price, often without making the cheaper option obvious.

What the ACCC says Microsoft did

In October 2025 the ACCC took Microsoft to the Federal Court, alleging it misled about 2.7 million Australian subscribers through the ACCC's Federal Court action. The allegation: from 31 October 2024, Microsoft told Personal and Family subscribers on auto-renewal that to keep their plan they had to accept Copilot and a higher price — Personal rose from $109 to $159 a year, Family from $139 to $179 — or cancel. The regulator says there was a third option Microsoft did not disclose: a "Classic" plan that kept the old features, without Copilot, at the old price. It only appeared if you started to cancel.

Microsoft has since apologised — "we fell short of our standards here, and we apologise" — offered refunds to eligible subscribers, and made the Classic plans visible to everyone. The case, which seeks penalties, consumer redress and costs, is still before the court, and the allegations are untested. But the behaviour it describes is not unique to Microsoft. It is the loud version of something quieter happening to every subscription you hold.

The AI tax is now on every subscription

The software your business rents — accounting, scheduling, CRM, email, design — is being repriced around AI. Vendors add an "AI tier", fold an add-on that used to be optional into the core plan, and lift the headline price to match. Vertice, a procurement platform that tracks more than US$30 billion in software spending, put the average software price rise at 13.2 per cent over the year to March 2026 — well ahead of inflation, and driven in large part by AI features. That figure is global and covers software generally, but the mechanism is the same on an Australian invoice.

This is a Cost Intelligence problem before it is a technology one. The danger isn't the AI; it's paying for AI you don't use. A plan can jump 20, 30, 45 per cent for an assistant nobody in the office has opened, while the real gains — the hours AI could hand back on quoting, reconciliation or client intake — go unclaimed because no one set the tool up to do actual work. You end up carrying the cost of AI and none of the return. It's the same pattern we traced in the gap between trying AI and making it stick, only now it shows up on the bill. Before you renew anything, see where AI actually touches your business.

What to do about it

Audit the tax, then decide where AI earns its keep. Pull your last 12 months of software subscriptions and flag every one whose price moved. For each rise, ask the vendor the question Microsoft's customers were never prompted to ask: is there a cheaper plan without the AI features, and are we using the AI we're now paying for? Microsoft's Classic plan existed the whole time — it just wasn't advertised. Often there is an equivalent, and the saving is immediate. Where the AI is worth keeping, make it do something: pick one workflow, set the tool up to run it, and the line item starts buying back hours instead of sitting idle.

There's a second lesson if you're on the other side of the counter. If your business auto-renews customers and you're tempted to bundle a new "AI tier" and nudge everyone onto a dearer plan, the conduct that put Microsoft in court is the same conduct the Australian Consumer Law applies to you: spell out every option, including the cheaper one, before the renewal — not only when someone tries to leave. The ACCC has shown through its pursuit of misleading AI claims that it acts, and not only against the big names. Decide where AI sits in your business and your budget — don't let a vendor's bundling team decide for you. If your costs have crept up and you're not sure which AI is actually returning anything, a short call will help you separate the tax from the tools.