Microsoft Apologizes to Australian Subscribers Over Pricing
Microsoft has issued a formal apology to approximately 2.7 million Australian subscribers following legal action by the country’s competition regulator. The tech company acknowledged that it failed to clearly communicate subscription alternatives when it introduced AI capabilities and raised prices in October 2024.
The Australian Competition and Consumer Commission filed a Federal Court lawsuit against Microsoft, claiming the company deliberately concealed a cheaper subscription tier from customers. According to the watchdog’s investigation, Microsoft presented users with only two apparent options: accept the more expensive plan with the Copilot AI assistant or cancel their subscription entirely.
The Microsoft 365 Personal plan increased by 45 percent, jumping from 109 Australian dollars to 159 dollars per month. The Family plan rose 29 percent, moving from 139 to 179 dollars monthly. These significant price increases coincided with the bundling of Copilot, Microsoft’s artificial intelligence assistant, into the standard subscription packages.
The competition regulator discovered that the Classic subscription option, which maintains the original features without AI functionality at the previous lower price, was only revealed to customers once they initiated the cancellation process. This design meant most users were unaware that a non-AI alternative existed at their original subscription cost.
Screenshots obtained by the ACCC demonstrated how the Classic plan option remained hidden throughout the normal subscription management interface. The watchdog argued this approach prevented consumers from making fully informed decisions about which plan best suited their needs and budgets.
In response to the legal proceedings, Microsoft sent an email to affected Australian subscribers acknowledging the communication failure. The company expressed regret for not being transparent about the full range of available options when implementing the pricing changes.
Microsoft now offers Australian subscribers two paths forward. They can remain on the current AI-enabled plan at the increased price, or switch to the Classic plan at the original lower price without Copilot features or guaranteed new feature updates. The company has committed to processing refunds for customers who switch to the Classic plan by December 31, 2025, covering the price difference back to November 30, 2024.
The ACCC’s legal action seeks substantial penalties, injunctions, consumer redress, and court costs. If the court rules in favor of the regulator, Microsoft could face multimillion-dollar fines for breaching Australian consumer protection laws.
The case highlights growing regulatory scrutiny of how technology companies communicate pricing changes and bundle new features. Consumer protection authorities increasingly expect businesses to present pricing options transparently rather than using design choices that obscure cheaper alternatives.
Microsoft stated it has operated in Australia for over 40 years based on principles of trust and transparency. The company acknowledged falling short of its own standards and committed to learning from the situation to improve future practices.
