Microsoft Takes Responsibility for AI Pricing Misstep
In the wake of legal action taken by the Australian Competition and Consumer Commission (ACCC), tech giant Microsoft has formally apologized to its 2.7 million Australian subscribers. The apology stems from allegations that the company failed to clearly communicate more affordable subscription options when introducing AI capabilities into its Microsoft 365 Personal and Family plans.
The controversy began last October, when Microsoft integrated its Copilot AI assistant into select Microsoft 365 plans. While AI features added value, they came with higher prices—and confusion about the availability of non-AI alternatives. Customers were left unaware of cheaper subscription options, sparking criticism and legal scrutiny.
Refunds for Subscribers: What You Need to Know
Microsoft has outlined two options for affected subscribers:
- Stay on the AI-enabled plans: Subscribers can continue with the enhanced plans, which cost $10–$12 (AU$16–$18) per month and include the Copilot AI assistant.
- Switch to Classic plans: Customers who prefer the original, non-AI-enabled features can opt for the Microsoft 365 Classic subscription at a lower cost of $7–$9 (AU$11–$14) per month. Those switching by December 31, 2025, will receive refunds for the price difference, backdated to their first renewal after November 30, 2024.
To encourage users to make informed choices, Microsoft is emphasizing the importance of trust and transparency, apologizing for falling short of these values. “We could have been clearer about the availability of a non-AI-enabled offering,” the company said in a statement addressing subscribers.
Customer Trust: What Went Wrong?
The ACCC alleges that Microsoft deliberately withheld information about its cheaper “Classic” plans to drive adoption of AI-powered subscriptions. Joni Pirovich, CEO of agentic operating system Crystal aOS, commented, “Companies should explicitly separate AI and non-AI pricing tiers at launch, as well as state the pros and cons of each option, allowing consumers to make informed decisions.” This incident serves as a reminder for businesses to prioritize transparency and fair pricing practices when introducing new features.
Making the Switch: How to Opt for the Classic Plan
Subscribers who wish to switch to the Classic plan need to take action before December 31, 2025, to qualify for a refund. Notably, recurring billing must remain enabled to retain access. However, customers happy with their current AI-enabled subscriptions don’t need to make any changes.
Looking for a productivity boost without the added AI features? Switching to the Classic plan could be your best bet. For Australian subscribers, this option highlights Microsoft’s effort to rebuild trust while offering more tailored choices.
Microsoft’s Commitment to the Future
Addressing the concerns, Microsoft stated, “We have been present in Australia for more than 40 years, operating on the principles of trust and transparency. We will learn from this and improve.” By taking accountability and offering refunds, the company aims to win back consumer confidence and reinforce its image as a customer-first brand.
For those interested in exploring Microsoft’s AI-enabled plans while keeping costs in check, consider trying out Microsoft 365 products, available with flexible options to suit varying needs.
