Australia Takes Microsoft to Court Over Price Hikes
Australia's competition regulator, the Australian Competition and Consumer Commission (ACCC), has launched a lawsuit against Microsoft, alleging that the tech giant misled millions of customers regarding significant price hikes for its Microsoft 365 software. This legal action stems from claims that Microsoft bundled its software with the AI tool, Copilot, leading to inflated subscription costs.
From October 2024, the ACCC states that approximately 2.7 million customers were incorrectly informed that they needed to upgrade to more expensive Microsoft 365 personal and family plans that included Copilot. The annual subscription price for the personal plan surged by 45%, reaching A$159 (around $103.32), while the family plan saw a 29% increase to A$179.
The ACCC argues that Microsoft failed to adequately inform users that a cheaper “classic” plan without Copilot remained available. This crucial information was only revealed when consumers initiated the cancellation process, which the regulator claims violates Australian consumer law by not disclosing vital choices and giving a misleading impression of available options.
Additionally, Microsoft’s prior communications, including emails and blog posts, did not mention the cheaper alternative. Customers were only informed that the price increase would take effect at their next auto-renewal, further compounding the issue of transparency.
A spokesperson from Microsoft stated that the company is reviewing the ACCC’s claims in detail. The regulator is seeking penalties, consumer redress, injunctions, and costs from both Microsoft Australia Pty Ltd and its parent company, Microsoft Corp in the U.S. The ACCC pointed out that the maximum penalty for each breach of Australian consumer law could be A$50 million, three times the benefits gained, or 30% of the corporation’s adjusted turnover during the breach period if the value of benefits is indeterminate.
As the lawsuit unfolds, the ACCC emphasizes the need for businesses to maintain transparency and fairness in their pricing strategies. The regulator has stated that any potential penalties will be determined by the Court based on its findings, and it has refrained from speculating on the possible outcomes. This case underscores the growing scrutiny on tech companies regarding their pricing practices, particularly in light of the increasing integration of AI into consumer products.
