Towards the end of October, the Australian Competition & Consumer Commission (ACCC) filed a lawsuit against Microsoft, claiming that the company misled approximately 2.7 million users into subscribing to a more expensive Microsoft 365 plan after hiking prices for its personal and family accounts.
The commission indicated that the software giant only presented users with two options: maintaining their subscriptions, which now include a Copilot integration for a higher price, or canceling the plan altogether.
Consumer trust and transparency are top priorities for Microsoft, and we are reviewing the ACCC’s claim in detail. We remain committed to working constructively with the regulator and ensuring our practices meet all legal and ethical standards.
More recently, the tech giant started reaching out to affected users about the omission of the third option to its Microsoft 365 plan, which allowed them to retain all the classic features without the Copilot AI integration, referring to it as “a subscription alternative that we could have communicated more clearly”.
According to Microsoft:
“In hindsight, we could have been clearer about the availability of a non-AI-enabled offering with subscribers, not just to those who opted to cancel their subscription.
In our email to subscribers [on Thursday], we expressed our regret for not being clearer about our subscription options, shared details about lower-priced alternatives that come without AI and offered a refund to eligible subscribers who wish to switch.”
Microsoft admitted that its communication fell short of its standards and stated that it plans to learn from the incident and improve its actions moving forward. But perhaps more interestingly, multiple users have indicated that their efforts to leverage Microsoft’s offer to downgrade their M365 subscriptions and automatically get a refund have been botched.
“One would have hoped that Microsoft would have checked this before sending out the mass email, but here we are,” an aggrieved user lamented. An attempt to downgrade to the cheaper tier with all the classic features was met by an error.
More concerningly, downgrading from Microsoft’s expensive and AI-infused M365 tier to the Family Classic plan doesn’t seem to be an option. Users can only reportedly downgrade to the Personal Classic Plan, which isn’t a viable solution for those with family licenses.
A Microsoft spokesperson indicated that “some subscribers eligible for the refund received an incorrect link,” which subsequently caused the reported error. The representative issued an apology nd indicated that the issue was being fixed.
“An epic fail by Microsoft,” another user complained.
That said, while the ACCC’s Chair Gina Cass-Gottlieb welcomes Microsoft’s apology and refund to the affected 2.7 million users, the commission will“continue to seek penalties, injunctions, declarations, effective consumer redress and costs in court”.
FAQ
Did Microsoft raise the price for Microsoft 365 plans in Australia?
From October 2024, the tech giant raised the prices of Microsoft 365 subscriptions by 45% for personal accounts, raising the annual cost to 179 AUD from 109 AUD. The family plan saw a 29% increase in price, from 139 AUD to 179 AUD.
Why did Australia’s consumer watchdog file a lawsuit against Microsoft?
Microsoft reportedly deliberately concealed a cheaper Microsoft 365 plan that retained all Classic features, excluding the Copilot AI integration, after hiking the subscription prices for family and personal accounts.
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