Microsoft has issued a formal apology to nearly 2.7 million Australian subscribers of its Microsoft 365 Personal and Family plans, admitting it fell short on transparency during a price hike tied to the rollout of its AI assistant Copilot. The move follows legal action by the Australian Competition and Consumer Commission (ACCC), which accused the tech giant of misleading users by not clearly disclosing cheaper non-AI options. Eligible customers who switch back to the original Classic plans by December 31, can claim refunds for the extra amounts paid since their first renewal after November 30, 2024. Emails outlining the options have began reaching users, though some have reported glitches with the linked downgrade process.
The ACCC Allegations and Price Hike Backdrop
The ACCC filed proceedings in the Federal Court last week, claiming Microsoft deceived subscribers through emails, a blog post, and in-app notices from October 31 last year. Users were told they must either accept the Copilot-integrated plans at higher rates or cancel, without upfront mention of Classic plans that retain core apps like Word and Excel at pre-hike prices. The Personal plan rose 45 percent from AUD 109 to AUD 159 annually, while Family increased 29 percent from AUD 139 to AUD 179. The regulator highlighted consumer complaints about confusion and unintended overpayments, arguing the omissions breached Australian consumer law. Microsoft now faces potential penalties up to AUD 50 million, plus orders for further redress.
Microsoft's Apology and Commitment to Change
In an email to affected users and a public statement, Microsoft expressed regret for the unclear communication. It noted the AI enhancements were introduced to meet demand for advanced tools but acknowledged the non-AI Classic option should have been highlighted earlier, not just during cancellations. The company pledged to collaborate with the ACCC, improve future messaging, and ensure refunds are processed smoothly within 30 days of plan switches. Funds will return to the original payment method and reflect in accounts shortly after. Microsoft emphasised trust as the foundation of its customer relationships, vowing to learn from the episode.
Step-by-Step Guide to Claim Your Refund
Eligible Australian subscribers on auto-renewing Personal or Family plans who renewed after November 30, 2024, can follow these steps to switch plans and secure a refund. Act before the December 31, 2025, deadline to qualify.
1. Look for an official email from Microsoft titled something like "Your Microsoft 365 Options". It should detail your plan and refund potential. If you have not received it, sign in to your Microsoft account at account.microsoft.com and navigate to Services and subscriptions to confirm your renewal date.
2. Decide between staying on the current Copilot-enabled plan (AUD 16 monthly for Personal or AUD 18 for Family) or switching to Classic (AUD 11 for Personal or AUD 14 for Family). Classic includes core apps and security updates but skips Copilot and some new features.
3. Click the secure link in the email to access the downgrade option, or visit account.microsoft.com/services, sign in with your subscription-linked Microsoft account, select your plan, and choose "Switch to Classic". Keep recurring billing active to maintain the subscription post-switch.
4. Microsoft will verify the change immediately. You will get a confirmation email or in-app notice.
5. The company calculates the price difference from your first post-November 30 renewal and issues it within 30 days. Track progress in your account under Payment and billing.
If you encounter issues like broken links or errors (as some users have reported), use the chat support on the Microsoft site or visit support.microsoft.com for manual guidance.
