Microsoft allegedly misled millions with upgrade offer
Tech giant Microsoft is facing hefty fines for allegedly misleading millions of Australian customers by trying to persuade them to pay more than necessary for an AI upgrade.
Australia’s consumer watchdog has taken the US company to court for allegedly leading customers to believe they must either pay extra subscription fees when the AI assistant Copilot is integrated into their packages, or cancel altogether.
But subscribers also have the option of continuing their previous plans with the AI assistant for the same price, the Australian Competition and Consumer Commission said in the Federal Court case.
Approximately 2.7 million Australians have received emails stating that their Microsoft 365 personal account will automatically renew for $159 for a one-year subscription unless the customer cancels.
“You will be charged the new price unless you cancel or turn off recurring billing,” the email said.
ACCC chief executive Gina Cass-Gottlieb said a consumer would not be aware that it was possible to switch to a separate “classic” plan at the same price as the current product.
The watchdog alleged that Microsoft deliberately omitted references to the plan in an attempt to increase the number of customers switching to the more expensive plan.
“The Microsoft Office applications included in 365 subscriptions are vital in many people’s lives, and given that alternatives to the bundled suite are limited, canceling the subscription is a decision many people will not take lightly,” Ms Cass-Gottlieb said in a statement on Monday.
“We are concerned that Microsoft’s communications deny customers the opportunity to make informed decisions about their subscription options, which include the possibility of keeping all the features of their existing plan without Copilot and at a lower price.”
A Microsoft spokesperson said consumer trust and transparency are top priorities for the company and that the consumer watchdog is reviewing the claim in detail.
“We are committed to working constructively with the regulator and ensuring our practices comply with all legal and ethical standards,” they said.
A second email was sent seven days before the automatic renewal date, referring to the classic plan.
Microsoft 365 provides access to the technology giant’s Office products such as Word, Excel and PowerPoint, as well as services such as Outlook and Teams.
365 products, including Copilot for the personal account, increased from $109 to $159, while access to the family plan also increased from $139 to $179.
“All businesses are required to provide accurate information about their services and prices. Failure to do so risks breaching the Australian Consumer Law,” Ms Cass-Gottlieb said.
Maximum penalties include a $50 million fine, three times the company’s profits from deceptive practices, or 30 percent of the company’s adjusted turnover during the breach period.
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