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In a “mea culpa” email sent to Australian subscribers today, Microsoft has apologised and offered refunds for customers who may have been misled into paying more than they should when renewing their annual subscriptions to Microsoft 365 plans that included the global tech giant’s artificial intelligence assistant Copilot.
The apology comes on the heels of Federal Court action launched by the Australian Competition and Consumer Commission early last week against Microsoft alleging that the company had duped 2.7 million customers into accepting the auto-renewal notices by not making it clear they could opt out of Copilot and renew their subscriptions for a lower price.
Microsoft is facing a potential multimillion-dollar penalty if the Federal Court finds in favour of the ACCC, which is alleging that since 31 October last year, subscribers of Microsoft 365 personal and family plans on auto-renewal notices were told they must accept the integration of Copilot and pay higher prices for their plan or cancel their subscription.
The ACCC says the information provided to subscribers who were renewing their plans was false or misleading because there was an undisclosed third option in which they could retain all the features of their existing plan, without Copilot, at the previous lower price.
The annual subscription for the Microsoft 365 Personal plan increased by 45 per cent from $109 to $159, while the Family plan rose by 29 per cent from $139 to $179 due to the inclusion of Copilot.
In a statement released today, Microsoft says it is reaching out to Microsoft 365 Personal and Family subscribers in Australia, pointing out that “we could have communicated more clearly when we changed our pricing in October 2024”.
“In response to the demand for advanced AI tools, we introduced AI capabilities into the Microsoft 365 Personal and Family subscriptions that we offer in Australia,” says 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, 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.”
In the email issued to affected customers today, Microsoft is offering a number of options including a refund for those who switch to the Microsoft 365 Personal/Family Classic plan that excludes the Copilot feature.
In its Federal Court action, the ACCC said Microsoft’s original 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”, an option that the ACCC says many subscribers would not have taken lightly.
In its statement today, Microsoft says the company has been present in Australia for more than 40 years, "operating on the principles of trust and transparency".
“We fell short of our standards here, and we apologise," says the company. "We will learn from this and improve.”
The offer of a refund does not affect the ACCC’s current Federal Court action against Microsoft.
The consumer watchdog is seeking orders against the company, including penalties, injunctions, declarations, consumer redress and costs.
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