Microsoft is under scrutiny for allegedly misleading millions of Australian customers regarding an AI upgrade offer that obscured critical subscription plan details. The Australian Competition and Consumer Commission (ACCC) has initiated legal proceedings against the tech giant, claiming it misled users about their options when the AI assistant, Copilot, was integrated into Microsoft 365 packages.
The ACCC contends that Microsoft led consumers to believe they were required to pay additional subscription fees or cancel their services entirely. In reality, customers could have opted to retain their existing plan with Copilot at the same price. Approximately 2.7 million Australians received emails indicating that a personal Microsoft 365 account would automatically renew at $159 for a one-year subscription if they did not cancel.
According to ACCC chair Gina Cass-Gottlieb, consumers were not informed that they could switch to a “classic” plan, which would provide them with the same features at a lower price. Cass-Gottlieb stated, “The Microsoft Office apps included in 365 subscriptions are essential in many people’s lives, and given there are limited substitutes to the bundled package, cancelling the subscription is a decision many would not make lightly.”
The ACCC accused Microsoft of deliberately omitting information about the classic plan to drive customers toward the more expensive option. Cass-Gottlieb emphasized the importance of accurate information, stating, “All businesses need to provide accurate information about their services and prices. Failure to do so risks breaching the Australian Consumer Law.”
In response, a Microsoft spokesperson asserted that consumer trust and transparency are top priorities for the company. They confirmed that Microsoft is reviewing the ACCC’s claims and is committed to aligning its practices with legal and ethical standards.
Interestingly, a second email referencing the classic plan was dispatched just seven days before the auto-renewal date, which raised additional concerns about the clarity of the communication.
Microsoft 365 offers access to a range of Office products, including Word, Excel, PowerPoint, and services like Outlook and Teams. The pricing for the product has seen a significant increase, with the cost for a personal account rising from $109 to $159, while a family plan increased from $139 to $179.
The potential consequences for Microsoft are severe, with maximum penalties reaching up to $50 million, three times the benefits gained from the misleading practices, or 30 percent of the corporation’s adjusted turnover during the breach period. As this case unfolds, it underscores the critical need for transparency in digital service offerings and consumer rights in Australia.
