A lawsuit has been filed against Microsoft after allegations were made of purposefully misleading 2.7 million Australian users.
Today, the Australian Competition and Consumer Commission (ACCC) has published a lawsuit against Microsoft Australia and its US corporation, stating that the software giant had intentionally misled its Australian customers after a 45% maximum price increase was added to its AI assistant, Copilot, on October 31, 2024.
The ACCC claims that Australian Microsoft Copilot customers were told to pay the higher subscription fee or cancel their subscription altogether, without informing them of their third plan option.
The third plan option, Microsoft 365 personal and family classic plans, was claimed to be accessible only to customers once they had begun the process of canceling their subscriptions. At that point, customers were offered lower prices while keeping all original features without the AI assistant.
The regulator claimed this action was in breach of Australian consumer law, as Microsoft had failed to disclose its cheaper plan options and created a misconception about the options available to its customers.
ACCC Chair, Gina Cass-Gottlieb, revealed the regulator’s next steps in the lawsuit, stating that a number of customers would have opted to the classic plan if they were made aware.
“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,” she said.
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
Although Microsoft is making headlines this week, it is far from the only major customer service vendor to have found itself in hot water.
In recent months, several other companies have been flagged for consumer law breaches.
In one example, Amazon settled a $2.5BN lawsuit with the US Federal Trade Commission in late September after alleging the multinational tech company of duping customers into signing up for their Prime services without their knowledge.
In line with Australian consumer laws, ACCC has outlined that the maximum penalty per breach is A$50MN.
This also follows a similar lawsuit filed earlier this month by ChatGPT customers, accusing Microsoft of exploiting its OpenAI cloud deal by allegedly inflating the AI platform’s prices while also decreasing service quality.
This breach highlights the wider issue of how tech companies broadcast their product price changes to their customers, especially in the increased rate of AI integration.
The Microsoft lawsuit also reveals that regulators are paying more attention to these companies’ pricing options and how clearly they’re being communicated to the customer, meaning more tech companies will be forced to be more transparent when pricing their products, as well as tackling raising concerns around their customer loyalty.
