The ACCC has taken Microsoft to the Federal Court for allegedly misleading 2.7 million Australian customers regarding subscription options and price increases after integrating its AI assistant, Copilot, into Microsoft 365 plans.
The competition regulator alleged Microsoft 365 Personal and Family plan subscribers were told to either pay higher prices for Copilot or cancel.
This was false or misleading, the ACCC claims, because there was an undisclosed third option for subscribers to keep their existing ‘classic’ plan, without Copilot or the markup in price.
The only way customers could find out about the ‘classic’ plans was when they opted to cancel their subscription because that was when a new page appeared offering the option to switch to the ‘classic’ plan instead.
Prices increased from $109 to $159 for the Personal plan, and $139 to $179 for the Family plan when Copilot was integrated.
“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.”
The ACCC said began its investigation after receiving numerous consumer reports and reviewing online discussions, including on Reddit.
Micrsoft said it was reviewing the ACCC’s case and that it was “committed to working constructively with the regulator and ensuring our practices meet all legal and ethical standards”.
Emails and blog posts as evidence
According to the ACCC, Microsoft sent two emails to its customers and published a blog post about the Copilot integration and the price increases that would apply to the relevant subscribers’ next auto-renewal. That blog post has since been removed.
“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,” 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.”
“We allege that Microsoft’s two emails to existing subscribers and the blog post were false or misleading as they conveyed that consumers had to accept the more expensive Copilot-integrated plans, and that the only other option was to cancel,” Ms Cass-Gottlieb said.
“All businesses need to provide accurate information about their services and prices. Failure to do so risks breaching the Australian Consumer Law.”
The competition watchdog is now is seeking penalties, injunctions, declarations, consumer compensation, and costs.
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