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At the time Microsoft announced a significant price increase for its productivity software, subscribers were allegedly offered a limited choice: either agree to the higher fee including AI features or terminate their subscription.

According to the Australian consumer watchdog, the firm supposedly failed to disclose a alternative choice that enabled customers to continue using the software at the original cost without the artificial intelligence add-on, known as Copilot.

Legal Proceedings Launched by Regulator

The Australian Competition and Consumer Commission (ACCC) has taken Microsoft to federal court, alleging that the corporation deceived around 2.7 million Australian individual and household plan customers.

The regulatory authority asserts that communications sent to users exclusively described a pair of options: accepting the higher price or cancelling the plan.

It is claimed that the company's emails and online announcement were false or misleading, suggesting that consumers must accept the costlier AI-included subscriptions, and the only other choice was to cancel, the head of the commission, Gina Cass-Gottlieb, stated.

Hidden Option Revealed

The regulator claims that a third option, known as classic subscriptions, was available but was not disclosed from customers.

This particular plan allowed users to retain the features of their existing membership without Copilot at the original lower price.

Subscribers were solely informed about this alternative when they started terminating their subscription, as per the ACCC.

Cost Hikes and User Consequences

Yearly membership cost for the Microsoft 365 individual subscription increased by 45% from $109 to $159 with Copilot included.

The family plan saw a twenty-nine percent increase, going up from $139 AUD to $179 AUD annually.

The corporation notified automatically renewing customers about the Copilot integration and pending cost adjustment through two emails and a online article.

It will be claimed in the legal proceeding that the company intentionally omitted reference to the classic plans in its notifications and concealed their availability until after customers initiated the termination procedure to boost the number of users on higher-priced AI-enhanced plans, the chairperson continued.

Essential Tools and Limited Substitutes

The office apps included in 365 subscriptions are vital in many people's lives, and given there are limited alternatives to the bundled package, cancelling may not have been a feasible option for users.

Consumers may have opted for the standard subscription if they had been aware of all the available options, according to the commission.

Probe and Potential Penalties

The commission's inquiry relied on a significant number of consumer reports as well as digital discussions from sites including Reddit.

The regulatory body is pursuing orders including penalties, injunctions, declarations, consumer redress and costs.

The maximum fine would be the greater of $50 million, triple the overall gains acquired, or thirty percent of the company's adjusted turnover during the violation period.

Company Response

Consumer trust and openness are key focuses for Microsoft, and we are examining the commission's claim in detail, a company representative said.

We continue to be dedicated to working constructively with the regulator and ensuring our procedures meet all regulatory and moral standards.