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Microsoft ( MSFT ) 365 personal plan price increased by 45%

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Cheaper 'classic' plan only revealed during cancellation

process

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Regulator seeks penalties, consumer redress and costs from

Microsoft ( MSFT )

(Adds Microsoft response in paragraph 7)

Oct 27 (Reuters) - Australia's competition regulator on

Monday sued Microsoft ( MSFT ), accusing it of misleading

millions of customers into paying higher prices for its

Microsoft ( MSFT ) 365 software after bundling it with artificial

intelligence tool Copilot.

The Australian Competition and Consumer Commission (ACCC)

alleged that from October 2024, the technology giant misled

about 2.7 million customers by suggesting they had to move to

higher-priced Microsoft ( MSFT ) 365 personal and family plans that

included Copilot.

After the integration of Copilot, the annual subscription

price of the Microsoft ( MSFT ) 365 personal plan increased by 45% to

A$159 ($103.32) and the price of the family plan increased by

29% to A$179, the ACCC said.

The regulator said Microsoft ( MSFT ) failed to clearly tell users

that a cheaper "classic" plan without Copilot was still

available.

The watchdog said the option to keep the cheaper plan was

only revealed after consumers began the cancellation process, a

design it argued breached Australian consumer law by failing to

disclose material information and creating a false impression of

available choices.

Microsoft's ( MSFT ) previous communications through emails and a

blog post failed to mention the cheaper alternative, only

informing customers that the price increase would apply at the

next auto-renewal, the ACCC said.

A Microsoft ( MSFT ) spokesperson said in an emailed response that it

was reviewing the ACCC's claim in detail.

The ACCC is seeking penalties, consumer redress, injunctions

and costs from Microsoft Australia Pty Ltd and its U.S. parent,

Microsoft Corp. ( MSFT )

The ACCC said the maximum penalty that could be imposed on a

company for each breach of Australian consumer law was the

greater of A$50 million, three times the benefits obtained that

were reasonably attributable, or 30% of the corporation's

adjusted turnover during the breach period if the value of the

benefits could not be determined.

"Any penalty that might apply to this conduct is a matter

for the Court to determine and would depend on the Court's

findings," the regulator said. "The ACCC will not comment on

what penalties the Court may impose."

($1 = 1.5389 Australian dollars)