Microsoft allegedly misled millions with upgrade offer
Alex Mitchell |
Tech giant Microsoft is facing hefty fines for allegedly misleading millions of Australian customers by trying to convince them to pay more than needed for an AI upgrade.
Australia’s consumer watchdog has taken the US company to court for allegedly leading customers to believe they must either pay extra subscription fees when its AI assistant Copilot was integrated into their package or cancel altogether.
But subscribers also had the choice of maintaining their previous plan with the AI assistant at the same price, the Australian Competition and Consumer Commission said in the Federal Court case.
Around 2.7 million Australians received the emails, which said a Microsoft 365 personal account would auto-renew at $159 for a one-year subscription if the customer did not cancel.
“You will be charged the new price unless you cancel or turn off recurring billing,” the email read.
ACCC chair Gina Cass-Gottlieb said a consumer would not have been aware that switching to a separate “classic” plan, with the existing product and at the same price, was available.
The watchdog alleged Microsoft deliberately omitted references to the plan to try to increase the number of customers moving to the more expensive plan.
“The Microsoft Office apps included in 365 subscriptions are essential in many people’s lives and given there are limited substitutes to the bundled package, cancelling the subscription is a decision many would not make lightly,” Ms Cass-Gottlieb said in a statement on Monday.
“We’re concerned that Microsoft’s communications denied its customers the opportunity to make informed decisions about their subscription options, which included the possibility of retaining all the features of their existing plan without Copilot and at the lower price.”
A Microsoft spokesperson said consumer trust and transparency were top priorities for the company and it was reviewing the consumer watchdog’s claim in detail.
“We remain committed to working constructively with the regulator and ensuring our practices meet all legal and ethical standards,” they said.
A second email, which did refer to the classic plan, was sent seven days before the auto-renewal date.
Microsoft 365 provides access to the tech giant’s Office products like Word, Excel and PowerPoint, along with services such as Outlook and Teams.
The 365 product including Copilot for a personal account jumped from $109 to $159, while access to a family plan went from $139 to $179.
“All businesses need to provide accurate information about their services and prices. Failure to do so risks breaching the Australian Consumer Law,” Ms Cass-Gottlieb said.
Maximum penalties include a $50 million fine, three times the benefits a company obtained from misleading practice or 30 per cent of the corporation’s adjusted turnover during the breach period.
AAP
