Microsoft 365 price hikes have landed the tech giant in hot water

Australian regulators have filed a lawsuit against Microsoft for allegedly misleading users over Microsoft 365 pricing changes.

In January, the tech giant's flagship Copilot service was rolled out across Microsoft 365, prompting price changes and a backlash against rising costs for users.

According to the Australian Competition and Consumer Commission (ACCC), when users of Microsoft 365 Personal and Family plans were approaching the end of their subscription, they were told they would have to accept the integration and pay higher prices for their plan, or else cancel their subscription altogether.

The ACCC said this was untrue and that a third, undisclosed option was available: switching to the Microsoft 365 Personal or Family Classic plans. This allowed subscribers to keep the features of their existing plan, without Copilot, at the previous lower price.

Notably, the complaint alleges users could only find out about this by starting the cancellation process, after which the option was presented.

"Following a detailed investigation, we will allege in court that Microsoft deliberately omitted reference to the Classic plans in its communications and concealed their existence until after subscribers initiated the cancellation process to increase the number of consumers on more expensive Copilot-integrated plans,” said ACCC chair Gina Cass-Gottlieb.

“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.”

Microsoft 365 pricing shot up in wake of integration

The integration of Copilot saw the price of the Microsoft 365 Personal plan increase by 45% from $109 to $159, while the cost of the Microsoft 365 Family plan went up by 29% from $139 to $179.

The ACCC noted that millions of affected users may have suffered economic harm through the automatic renewal of their subscription at the higher price.

The company sent two emails and published a blog post to inform auto-renewing subscribers about the Copilot integration and that the price increase would be applied at their next renewal.

"We allege that Microsoft’s two emails to existing subscribers and the blog post were false or misleading as they conveyed that consumers had to accept the more expensive Copilot-integrated plans, and that the only other option was to cancel,” said Cass-Gottlieb.

“All businesses need to provide accurate information about their services and prices. Failure to do so risks breaching the Australian Consumer Law."

If the claim is successful, Microsoft could face a penalty of $50 million, three times the total benefits that have been obtained and are reasonably attributable, or 30% of the corporation’s adjusted turnover during the breach turnover period, whichever is the greater.

ITPro approached Microsoft for comment but did not receive a response by time of publication.

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