Microsoft will offer refunds after admitting that it “fell short of our standards” by failing to inform users of the Microsoft 365 productivity suite that they could have stayed with a cheaper version of the suite that did not include the tech giant’s Copilot AI features.
The move relates to the October 2024 introduction of Copilot into the widely used productivity suite, which triggered a price increase for Microsoft 365 Personal and Family subscriptions that many users absorbed because they didn’t know there were alternatives.
“Existing subscribers will automatically get access to Copilot in their apps once they update to the latest version,” Microsoft said during the change early this year – leaving Personal and Family users paying $5 and $4 per month more, respectively, for Copilot enabled versions.
That translated to annual subscription prices that increased from $109 to $159 for the Personal plan – an increase of 45 per cent – and $139 to $179 for the Family plan, an increase of 29 percent.
Users who opted to cancel their subscriptions were given the option of switching to a non-AI version of Microsoft 365 called Microsoft 365 Classic – but those renewing their subscriptions were not informed of this option.
“I don’t want this AI garbage Microsoft is forcing down everyone’s throats and I do not want to pay extra for it,” one user lamented while complaining that they weren’t given the option to downgrade to the Microsoft 365 Family Classic option.
Microsoft this week emailed affected users with an apology, admitting that “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.”
Options for those affected
Users of Microsoft 365 have two options, Microsoft said.
The first is to stay on the existing Microsoft 365 Personal ($16 per month) or Family ($18 per month) plan, retaining access to Copilot and “ongoing feature updates.”
The second option is to switch to Microsoft 365 Personal Classic ($11 per month) or Family Classic ($14 per month), with Microsoft set to refund the price difference retroactive to the users’ first renewal date after 30 November 2024.
The option to switch is available until 31 December, and those who do switch need to keep recurrent billing enabled.
“Our relationship with our customers is based on trust and transparency,” Microsoft said in the email, “and we apologise for falling short of our standards.”
Squaring off with the ACCC
Microsoft’s move to offer refunds comes just ten days after it was outed by the ACCC, which announced on 27 October that it would sue Microsoft on behalf of the approximately 2.7 million local customers that had been affected by the price changes.
The tech giant “deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process” due to the higher prices, ACCC chair Gina Cass-Gottlieb said following a “detailed investigation”.
“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” – leaving users ignorant of the cheaper option.
That made Microsoft’s emails to users and blog post “false or misleading”, Cass-Gottlieb said, “as they conveyed that consumers had to accept the more expensive Copilot-integrated plans, and that the only other option was to cancel.”
“All businesses need to provide accurate information about their services and prices…. Failure to do so risks breaching the Australian Consumer Law” – which provides for potential penalties of at least $50 million.
