🔗 Share this article

At the time the software corporation declared a significant price increase for its productivity software, subscribers were reportedly presented with a limited choice: either agree to the higher rate with artificial intelligence tools or cancel their membership.

According to the Australian regulatory body, the company supposedly did not reveal a alternative choice that allowed users to keep accessing the application at the original cost excluding the artificial intelligence feature, called Copilot.

Legal Proceedings Launched by Regulator

Australia's primary consumer protection agency has brought the technology company to federal court, alleging that the firm deceived around 2.7 million Australian personal and family subscribers.

The ACCC states that communications sent to subscribers only outlined a pair of options: paying the increased fee or ending the plan.

It is claimed that Microsoft's electronic messages and online announcement were false or misleading, conveying that consumers had to accept the costlier AI-included subscriptions, while the sole alternative option was to cancel, the ACCC chair, Gina Cass-Gottlieb, said.

Hidden Option Revealed

The regulator alleges that a third option, referred to as classic plans, was available but was withheld from customers.

This plan allowed users to keep the capabilities of their current subscription excluding Copilot at the previous reduced price.

Subscribers were solely presented with this option when they began cancelling their subscription, as per the commission.

Price Increases and User Consequences

The annual membership cost for the Microsoft 365 personal plan rose by 45% from $109 to $159 with the AI tool included.

The family plan saw a twenty-nine percent increase, going up from $139 to $179 AUD per year.

Microsoft informed auto-renewing subscribers about the AI inclusion and upcoming cost adjustment through two emails and a blog post.

We will allege in the legal proceeding that Microsoft intentionally left out mention to the classic plans in its notifications and concealed their existence until subsequent to subscribers initiated the termination procedure to boost the quantity of consumers on higher-priced Copilot-integrated plans, the chairperson added.

Critical Applications and Limited Substitutes

The office apps included in the software packages are vital in numerous individuals' daily activities, and considering there are few substitutes to the combined offering, cancelling may not have been a practical choice for subscribers.

Customers could have opted for the classic plan if they had been aware of all the viable options, as stated by the commission.

Investigation and Possible Consequences

The ACCC's inquiry drew on a significant number of user complaints as well as digital discussions from sites such as Reddit.

The regulatory body is pursuing orders comprising penalties, injunctions, formal statements, customer compensation and costs.

The maximum fine could be the greater of $50 million, triple the overall gains acquired, or 30% of the corporation's modified revenue during the violation period.

Company Response

Customer confidence and transparency are top priorities for Microsoft, and we are reviewing the ACCC's claim in depth, a Microsoft spokesperson stated.

We remain dedicated to working constructively with the oversight body and making certain our practices comply with all legal and ethical standards.