Microsoft Faces Over $50 Million Fine for Raising Microsoft 365 Prices by 45% and Hiding the Cheapest Plan
Microsoft 365, formerly known as Office 365, is a subscription service that includes Microsoft Office, 1 TB of OneDrive storage, and other services. Recently, the Redmond-based company upset users by announcing and applying a significant price increase.
Microsoft justified the increase by claiming they had added Copilot AI features and therefore needed to charge more for the service.
Australian Regulators Claim Microsoft Misled Customers
When customers contacted Microsoft saying they did not want to use its AI features, the company offered them a version of Microsoft 365 without Copilot and without the price increase. However, this plan — which Microsoft support said was public — was in fact hidden from users in a misleading way.
This controversial decision did not sit well with Australian authorities, who have sued Microsoft for allegedly deceiving 2.7 million citizens through this pricing strategy.
Regulators claim Microsoft gave customers only two options: pay more or cancel the plan. Yet, as mentioned, there was still the classic plan without Copilot available at the old price. Microsoft only revealed this plan when customers threatened to cancel.
The Fine Could Exceed $50 Million
Microsoft now faces a fine that could exceed $50 million, which is roughly three times what the company allegedly overcharged users.
The Australian Competition and Consumer Commission (ACCC) has gathered evidence from customer testimonies and online forums like Reddit.
Gina Cass-Gottlieb, the ACCC chair, stated:
“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.”
“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.”
In other news, Microsoft Gaming CEO Phil Spencer stated that the company is not requiring its Xbox teams to use artificial intelligence in game development.
