2.7 million Australians will be offered refunds after Microsoft apologised for the way it charged customers to access its artificial intelligence tools. Microsoft Australia emailed the offer to software subscribers on Thursday, acknowledging that the pricing structure and plans lacked clarity and fell short of its standards.
The apology comes 10 days after the Australian Competition and Consumer Commission (ACCC) launched legal action against Microsoft Australia and its parent company in federal court.
The commission claims Microsoft misled consumers about subscription prices and the availability of cheaper plans without AI tools. If the court rules in its favour, Microsoft could face multimillion-dollar penalties.
Refunds and subscription options
Microsoft Australia began sending messages to Microsoft 365 Personal and Family subscribers on Thursday morning, outlining available plans and apologising for a lack of clarity.
The plans include $16 and $18 per month packages that include access to the company’s AI assistant Copilot, and $11 and $14 “classic” subscriptions that do not include the tool.
Microsoft said subscribers who opt to switch back to the cheaper plans before the end of 2025 would receive refunds dating back to payments made after 30 November 2024. “Our relationship is based on trust and transparency and we apologise for falling short of our standards,” the email read.
What are the allegations?
The ACCC alleges Microsoft misled about 2.7 million subscribers into paying higher prices to maintain their subscriptions with Copilot added and were not advised of a cheaper alternative.
Only when subscribers sought to cancel their service were they told about a non-AI option, commission chair Gina Cass-Gottlieb said. “We are concerned that Microsoft’s communications denied its customers the opportunity to make informed decisions about their subscription options,” she said.
Response from Microsoft
In a statement, Microsoft Australia acknowledged its shortcomings. “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,” the statement read. “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.”
Microsoft could also face large fines if the watchdog pursues and is successful in its lawsuit. Maximum penalties for corporations found guilty of anti-competitive practices include a $50 million fine, three times the value of the misleading act, or 30% of the company’s adjusted turnover during the breach.
