Key Takeaways
- The Microsoft 365 personal plan increased by 45% after Copilot was added.
- Customers allegedly weren’t given the option to stick with a classic plan until they started cancelling.
- Australia seeks penalties, consumer redress, injunctions and costs.
Australia’s competition regulator has just sued Microsoft. Their claim? That the tech giant mislead 2.7 million customers into signing up for a big 45% Microsoft 365 price hike that they didn’t need.
According to the regulator, Microsoft created new Microsoft 365 personal and family plans that integrated Copilot functionality, and significantly increased the plan’s cost as a result.
It then, allegedly, pushed those new plans on customers without adequately explaining that they could instead opt for a cheaper “classic” plan without Copilot.
Price Hikes of 45% and 29%
The news comes from a lawsuit by the Australian Competition and Consumer Commission (ACCC), and covers Microsoft’s actions from October 2024 until now.
According to the ACCC, the annual subscription price of the Microsoft 365 personal plan increased by 45% to reach A$159 (that’s $103.32 USD) while the price of the family plan similarly increased by 29% to A$179 (or $116.40 USD).
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29% and 45% hikes are big increases, so it’s understandable that customers might be interested in a way to keep the same functionality that they were used to without paying the premium for gaining access to the generative AI functionality that Copilot offers.
Customers Only Saw Cheaper Option After Cancellation Process Started, ACCC Says
However, the ACCC’s claim is that Microsoft only revealed that a cheaper “classic” plan was available after customers chose to start the cancellation process, Reuters reports.
If that’s right, customers who might have been unhappy with the dramatic price increase but were still willing to pay it wouldn’t have gotten the chance to see the cheaper option at all.
Worse, it may be illegal in Australia: It breaches Australian consumer law, according to the country’s watchdog, since it creates a false impression of available choices by failing to disclose material information.
Microsoft May Face Penalties of A$50 Million
The ACCC is after penalties, consumer redress, injunctions and costs, and is suing both Microsoft Australia Pty Ltd and Microsoft Corp (its US parent company).
The highest penalty being saught is about A$50 million, or 30% of the corporation’s adjusted turnover during the breach period.
“Any penalty that might apply to this conduct is a matter for the Court to determine and would depend on the Court’s findings. The ACCC will not comment on what penalties the Court may impose.” -ACCC
In an email response to Reuters, a Microsoft spokesperson said the company was reviewing the ACCC’s claim in detail.
