Microsoft issues apology for AI-linked subscription price hikes

Microsoft has begun reaching out to Microsoft 365 Personal and Family subscribers in Australia regarding AI-linked subscription price hikes.

The Australian Competition and Consumer Commission (ACCC) recently sued the company, alleging that from October 2024, the technology giant misled about 2.7 million customers by suggesting they had to move to higher-priced Microsoft 365 personal and family plans that included Copilot.

The regulator said Microsoft failed to clearly tell users that a cheaper “classic” plan without Copilot was still available.

Microsoft said that in response to the demand for advanced AI tools, the company introduced AI capabilities into the Microsoft 365 Personal and Family subscriptions that it offers in Australia.

"In hindsight, we could have been clearer about the availability of a non-AI enabled offering with subscribers, not just to those who opted to cancel their subscription," the company said in a statement.

"We have been present in Australia for more than 40 years, operating on the principles of trust and transparency. We fell short of our standards here, and we apologise. We will learn from this and improve. "

An email sent to subscribers offered two options: staying on a current Microsoft 365 Personal/Family plan or switching to a Microsoft 365 Personal/Family Classic plan and receiving a refund.

While the Microsoft 365 Personal/Family Classic plan includes the core Microsoft 365 apps and regular security updates, it does not include Copilot and "may not receive new feature updates".

After the integration of Copilot, the annual subscription price of the Microsoft 365 personal plan increased by 45% to A$159 ($103.32) and the price of the family plan increased by 29% to A$179, the ACCC said.