- Microsoft is embroiled in Australian litigation over questionable software pricing.
- ACCC alleges Microsoft 365 customers were misinformed about more economical alternatives.
- Potentially 2.7 million users may be impacted.
The Australian consumer regulatory authority has initiated legal proceedings against Microsoft, asserting that the tech giant misled millions of users concerning its Microsoft 365 service.
The Australian Competition and Consumer Commission (ACCC) contends that the company encouraged users to remain in an auto-renewal agreement for their Microsoft 365 subscriptions, despite the existence of less costly or more advantageous offers.
As many as 2.7 million subscribers of Microsoft 365 Personal and Family packages may have been impacted and could potentially receive a portion of reparations, contingent on the case’s outcome.
Legal Proceedings Concerning Microsoft 365 Pricing
The ACCC’s complaint posits that Microsoft failed to adequately inform users following the integration of its Copilot AI functionalities into the 365 ecosystem in October 2024.
Users enrolled in Personal or Family plans were reportedly misled into believing that retaining their current subscription would necessitate a premium due to this integration.
However, the ACCC claims that Microsoft disseminated “false or misleading” information, as there existed an undisclosed third option—the Microsoft 365 Personal or Family Classic plans—which enabled subscribers to preserve their existing features without Copilot, all while maintaining the previous, lower price.
The commission notes that, although Microsoft did disseminate two emails and published a blog post regarding the new features and pricing for auto-renewal subscribers, it conspicuously omitted mention of these alternative plans. Consequently, users would only discover their existence through an active cancellation process.
The complaint emphasizes that the price increases were substantial; the annual subscription for the Microsoft 365 Personal plan surged by 45%, escalating from AU$109 to AU$159, while the Family plan’s cost rose by 29%, from AU$139 to AU$179.
“The Microsoft Office applications encompassed within the 365 subscriptions are integral to many consumers’ daily lives. Given that there are limited substitutes for the bundled offerings, the decision to cancel a subscription is one that many users would not take lightly,” remarked ACCC Chair Gina Cass-Gottlieb.
“We have concerns that Microsoft’s communications deprived its customers of the chance to make informed choices regarding their subscription options, including the possibility of maintaining all features from their existing plan at a lower price without Copilot,” Ms. Cass-Gottlieb added.
“We believe numerous Microsoft 365 customers would have opted for the Classic plan had they been adequately informed of their choices.”
The ACCC aims to secure “orders including penalties, injunctions, declarations, consumer compensation, and costs,” noting that the maximum penalty for each violation of the Australian Consumer Law exceeds AU$50 million, thus placing Microsoft in a precarious financial position should the case prevail.
TechRadar Pro has reached out to Microsoft for commentary.
Furthermore, the company is also confronting a multibillion-pound lawsuit in the UK, alleging antitrust violations and inequitable software licensing practices, while simultaneously being embroiled in an enduring dispute with ValueLicensing concerning the sale of pre-owned Office and Windows licenses.
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