Microsoft has issued an apology to customers in Australia amid backlash over its pricing. The tech giant sent an email to consumers on Thursday and revealed that it would offer refunds to Microsoft 365 Personal and Family subscribers for the extra costs they have paid for its artificial intelligence tools.
The matter is linked to an October 2024 price hike by Microsoft. After Microsoft's AI feature, Copilot, was integrated into its Microsoft 365 subscription, the US-based company increased the price of its personal plan by 45 per cent from $109 to $159 per year. Similarly, the annual subscription cost for the Microsoft 365 family plan jumped by 29 per cent from $139 to $179, ABC reported.
Microsoft, in its email, expressed regret for “not being clearer about our subscription options, shared details about lower-priced alternatives that come without AI and offered a refund to eligible subscribers who wish to switch.” The company apologised for “falling short” of its standards on principles of trust and transparency.
Microsoft AI Plan: Who Is Eligible For A Refund
About 2.7 million Australians will be eligible for the refunds, The Guardian reported. The refund will be available to the affected customers if they choose to switch back to the cheaper plans before the end of 2025. Those subscribers would receive refunds within 30 days, dating back to payments made after November 30, 2024.
Customers can either stay on the Microsoft plan, which has Copilot features at the higher price, or go back to the "Classic" plan, which does not feature the AI assistant Copilot and “may not receive new feature updates".
The apology comes days after legal action against Microsoft, and its parent company, was launched by the Australian Competition and Consumer Commission (ACCC) in the federal court. The ACCC claimed the company had misled consumers about the availability of cheaper plans without AI tools and subscription prices. The ACCC alleges that customers were not advised about cheaper alternatives by Microsoft, and when they tried to cancel their service, they were told about a non-AI option.
Microsoft had told customers with auto-renewal subscriptions that to maintain their subscription, they "must accept the integration of Copilot and pay higher prices for their plan, or, alternatively, cancel their subscription," ABC reported.
Microsoft would have to pay millions in refunds. However, it could face more damage if the lawsuit by the ACCC is successful. Maximum penalties for firms found guilty of anti-competitive practices may amount to either a $50 million fine, 30 per cent of the company's adjusted turnover during the breach, or three times the value of the misleading act.
