The ACCC has commenced proceedings in the Federal Court against Microsoft Australia and its parent company Microsoft Corporation for allegedly misleading approximately 2.7 million Australian customers when communicating subscription options and price increases, after it integrated its AI assistant, Copilot, into Microsoft 365 plans.
The ACCC alleges that since 31 October 2024, Microsoft has told subscribers of Microsoft 365 Personal and Family plans with auto-renewal enabled that to maintain their subscription they must accept the integration of Copilot and pay higher prices for their plan, or, alternatively, cancel their subscription.
The ACCC alleges this information provided to subscribers was false or misleading because there was an undisclosed third option, the Microsoft 365 Personal or Family Classic plans, which allowed subscribers to retain the features of their existing plan, without Copilot, at the previous lower price.
Microsoft’s communication with subscribers did not refer to the existence of the “Classic” plans, and the only way subscribers could access them was to begin the process of cancelling their subscription. This involved navigating to the subscriptions section of their Microsoft account and selecting “Cancel subscription”. It was only on the following page that subscribers were given the option to instead move to the Classic plan. See a screenshot of the cancellation page revealing the Classic plan.
“Following a detailed investigation, we will allege in Court that Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process to increase the number of consumers on more expensive Copilot-integrated plans,” ACCC Chair Gina Cass-Gottlieb said.
“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.”
“We’re concerned that Microsoft’s communications denied its customers the opportunity to make informed decisions about their subscription options, which included the possibility of retaining all the features of their existing plan without Copilot and at the lower price,” Ms Cass-Gottlieb said.
“We believe many Microsoft 365 customers would have opted for the Classic plan had they been aware of all the available options.”
Following the integration of Copilot, the annual subscription price of the Microsoft 365 Personal plan increased by 45 per cent from $109 to $159. The annual subscription price for the Microsoft 365 Family plan increased by 29 per cent from $139 to $179.
Microsoft sent two emails and published a blog post to inform auto-renewing subscribers (as of 31 October 2024) about the Copilot integration and the impending price increase that would apply at their next renewal. These three pieces of communication are central to the ACCC’s case.
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