Microsoft apologizes to 2.7 million misled users for hiding subscription options after price hikes — and for broken refund links

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In late October, Australia’s competition regulator, the ACCC, took Microsoft to court, alleging the company tricked around 2.7 million customers into paying for a pricier Microsoft 365 subscription after increasing costs for personal and family plans.

The commission explained that the software company gave users only two choices: keep their existing subscription, which now features Copilot and costs more, or cancel it completely.

The company didn’t mention a third possibility: letting users keep their existing Microsoft 365 plan with all the original features, but without the new Copilot AI, for a lower cost.

Consequently, Microsoft responded to the claims, indicating:

Microsoft takes customer trust and openness seriously, and we’re carefully looking into the concerns raised by the ACCC. We’re dedicated to cooperating with the regulator and making sure everything we do is legal and ethical.

Recently, Microsoft began contacting users who were impacted by the removal of a specific Microsoft 365 plan option. This option let them keep the traditional features without the Copilot AI add-on. Microsoft admitted they hadn’t clearly explained this alternative subscription choice.

According to Microsoft:

Looking back, we realize we should have made it clearer to all our subscribers – not just those canceling – that there was an option to use our service without the AI features.

In a recent email to our subscribers, we apologized for any confusion regarding our subscription plans. We explained that there are more affordable options available without AI features, and we offered refunds to those who qualify and would like to change their plan.

Microsoft acknowledged that its communication wasn’t up to par and promised to improve how it handles things in the future. However, many users are reporting problems with Microsoft’s offer to downgrade their Microsoft 365 subscriptions and receive an automatic refund. It seems the process isn’t working smoothly for a lot of people.

A frustrated user expressed disappointment that Microsoft didn’t catch this issue before sending out a widespread email. When the user tried to switch to a lower-priced plan with the original features, they received an error message.

It’s also troubling that users can’t switch from the premium, AI-powered Microsoft 365 subscription to the older Family plan. Currently, they can only downgrade to the Personal plan, which doesn’t work for families who need a family license.

Microsoft said that a faulty link was sent to some customers who were due for a refund, causing the error they experienced. A company representative apologized and confirmed they are working to resolve the problem.

“An epic fail by Microsoft,” another user complained.

Although the ACCC chair, Gina Cass-Gottlieb, acknowledges and appreciates Microsoft’s apology and refunds to the 2.7 million impacted customers, the commission will still pursue further legal action. This includes seeking fines, court orders, formal rulings, compensation for consumers, and reimbursement of legal costs.

FAQ

Did Microsoft raise the price for Microsoft 365 plans in Australia?

Starting in October 2024, Microsoft increased the price of its Microsoft 365 subscriptions. Personal accounts now cost 179 AUD per year, a 45% increase from the previous price of 109 AUD. The family plan also became more expensive, rising 29% from 139 AUD to 179 AUD annually.

Why did Australia’s consumer watchdog file a lawsuit against Microsoft?

Microsoft allegedly hid a more affordable Microsoft 365 option that included all the original features, but without the new Copilot AI, after raising prices for family and individual subscriptions.

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2025-11-06 17:10