Just days after facing complaints from Australian regulators that could bring hefty fines, Microsoft is seeking to resolve the matter peacefully. The company regretted failing to properly inform users of cheaper subscription options, but Canberra authorities could still impose heavy fines.
Microsoft recently began sending apology emails to millions of Australian customers, informing users of its Microsoft 365 Personal and Family plans about details of cheaper options. Microsoft is also offering refunds to customers who renewed their cloud subscriptions in 2024 but were not informed of cheaper plans.
The apology comes as the Australian Competition and Consumer Commission (ACCC) has just announced legal action against Microsoft. The regulator accused Microsoft of misleading about 2.7 million Australian users into purchasing more expensive Microsoft 365 plans that came with the Copilot chatbot.
According to the ACCC, Microsoft gave subscribers very limited choices and effectively steered them into purchasing high-priced plans bundled with Copilot. When users want to cancel their subscription, Microsoft offers a third option, which is to keep the old package at the original price but change it to a new name. And the Microsoft 365 Personal and Family Classic plans that don't include Copilot are actually cheaper.
"In hindsight, we should have made it clearer to all subscribers, not just those who chose to cancel, that there were options without AI capabilities," Microsoft said.
Microsoft is now sending emails to about 3 million Australian subscribers outlining cheaper alternatives to the Copilot plan. The ACCC believes that Microsoft should have informed users of this information when they renewed their subscriptions.
Additionally, Microsoft is offering refunds to users who subscribe to Microsoft 365 after November 2024. Users can choose to continue with their current plan that includes Copilot, or switch to Personal or Family Classic and get a refund for the overpaid amount.
Microsoft said it has operated with trust and transparency in the Australian market for more than 40 years, admitted it fell short of its standards in this incident and regretted having to respond to a formal investigation by the ACCC.
Australian regulators will now decide whether to drop the case or pursue it, which is likely to force Microsoft to pay a fine of up to 30% of current revenue for the breach.