Australia initiates consumer protection proceedings against Microsoft
The Australian Competition & Consumer Commission, which is responsible for ensuring individuals and businesses comply with Australian competition and consumer protection laws has announced that it has initiated proceedings in the Federal Court against Microsoft Australia and its parent company Microsoft Corporation for allegedly misleading approximately 2.7 million Australian customers when giving notice of subscription options and price increases after it integrated its Copilot AI assistant into Microsoft 365 subscription plans.
The ACCC alleges that since 31st October 2024, Microsoft has told Microsoft 365 Personal and Family plan subscribers with auto-renewal enabled that to maintain their subscription, they must accept the integration of Copilot and pay higher prices for their plan, or else cancel their subscriptions.
Following the integration of Copilot, the annual subscription price of the Microsoft 365 Personal plan increased by an eye-watering 45% from $109 to $159. In contrast, the annual subscription price for the Microsoft 365 Family plan increased by a mere 29% from $139 to $179.
Microsoft’s communications with subscribers did not refer to the existence of the “Classic” plans without Copilot integration and the only way subscribers could access them was to begin the process of cancelling their subscriptions. This involved accessing the subscriptions section of their Microsoft account and selecting “Cancel subscription”. It was only on the following page that subscribers were given the option to move to the Classic plan instead.
Maximum penalties
Should Microsoft lose the case, the maximum penalty for each breach of the Australian Consumer Law is the greater of the following three options:
- $50 million;
- three times the total benefits that have been obtained and are reasonably attributable; or
- if the total value of the benefits cannot be determined, 30 per cent of the corporation’s adjusted turnover during the breach turnover period.
For Microsoft Australia, not to mention its parent company, the emphasis in the word consumer is firmly on its first three-letter syllable.