Microsoft Australia Issues Apology and Refund Offer After ACCC Lawsuit Over Copilot-Bundled Subscriptions
Tech giant admits its communications failed to clearly outline non-AI plan option following price increases and offers refunds to eligible Microsoft 365 subscribers
Microsoft Australia has formally apologised to its Microsoft 365 Personal and Family subscribers after acknowledging that its communications surrounding a major pricing overhaul in October 2024 “fell short of our standards”.
The company launched emails to affected customers on Thursday revealing that when it added its AI assistant Copilot to the subscription plans, it could have been clearer about the existence of a lower-cost version without the AI feature.
In the message it stated: “We have been present in Australia for more than 40 years, operating on the principles of trust and transparency.
We fell short of our standards here, and we apologise.”
The reforms in October 2024 involved integrating Copilot into Australian Microsoft 365 subscriptions and raising the price of the Personal plan and Family plan accordingly.
Microsoft Australia now explains that an alternative “Classic” plan without Copilot has been available, renewing at the prior lower price.
Under the offer, customers who switch to the Classic plan by 31 December 2025 will receive refunds for payments made from 30 November 2024 onwards.
The company asks subscribers who wish to stay on the advanced plan with Copilot to take no action.
This development follows legal action by the Australian Competition and Consumer Commission (ACCC), which on 27 October 2025 filed proceedings in the Federal Court against Microsoft Australia Pty Ltd and its U.S. parent.
The regulator alleges approximately 2.7 million Australian users were misled about their subscription options when Copilot was added and prices increased.
The ACCC contends that Microsoft told auto-renewing subscribers they either had to accept the higher price with Copilot or cancel their subscription.
It says the company omitted the option of retaining their existing plan without Copilot at the previous price.
The regulator is seeking penalties, consumer redress and injunctions under the Australian Consumer Law.
Microsoft said it is “reviewing the ACCC’s claim in detail” and affirmed its commitment to consumer trust and transparency.
In its customer email, the company admitted it should have communicated the availability of the non-AI alternative more clearly and not just to those seeking to cancel their plan.
Subscribers now have two clearly stated options: stay on Microsoft 365 with Copilot at the higher rate or switch to Microsoft 365 Classic without Copilot at the lower rate.
The refund is triggered only if the switch is made by the end of December 2025. Microsoft expects to process refunds within 30 days of the switch being made.
The ACCC has warned that the matter could result in penalties up to A$50 million or more depending on the benefit derived and size of the breach.
As the legal and regulatory process unfolds, the case may foreshadow heightened scrutiny of how technology firms in Australia communicate optional features, bundled services and price increases.
For now, Australian Microsoft 365 consumers affected by the rollout have an explicit pathway to reimbursement and choice over whether to opt in to AI-enabled subscriptions or retain the older, lower-cost plan.
The company launched emails to affected customers on Thursday revealing that when it added its AI assistant Copilot to the subscription plans, it could have been clearer about the existence of a lower-cost version without the AI feature.
In the message it stated: “We have been present in Australia for more than 40 years, operating on the principles of trust and transparency.
We fell short of our standards here, and we apologise.”
The reforms in October 2024 involved integrating Copilot into Australian Microsoft 365 subscriptions and raising the price of the Personal plan and Family plan accordingly.
Microsoft Australia now explains that an alternative “Classic” plan without Copilot has been available, renewing at the prior lower price.
Under the offer, customers who switch to the Classic plan by 31 December 2025 will receive refunds for payments made from 30 November 2024 onwards.
The company asks subscribers who wish to stay on the advanced plan with Copilot to take no action.
This development follows legal action by the Australian Competition and Consumer Commission (ACCC), which on 27 October 2025 filed proceedings in the Federal Court against Microsoft Australia Pty Ltd and its U.S. parent.
The regulator alleges approximately 2.7 million Australian users were misled about their subscription options when Copilot was added and prices increased.
The ACCC contends that Microsoft told auto-renewing subscribers they either had to accept the higher price with Copilot or cancel their subscription.
It says the company omitted the option of retaining their existing plan without Copilot at the previous price.
The regulator is seeking penalties, consumer redress and injunctions under the Australian Consumer Law.
Microsoft said it is “reviewing the ACCC’s claim in detail” and affirmed its commitment to consumer trust and transparency.
In its customer email, the company admitted it should have communicated the availability of the non-AI alternative more clearly and not just to those seeking to cancel their plan.
Subscribers now have two clearly stated options: stay on Microsoft 365 with Copilot at the higher rate or switch to Microsoft 365 Classic without Copilot at the lower rate.
The refund is triggered only if the switch is made by the end of December 2025. Microsoft expects to process refunds within 30 days of the switch being made.
The ACCC has warned that the matter could result in penalties up to A$50 million or more depending on the benefit derived and size of the breach.
As the legal and regulatory process unfolds, the case may foreshadow heightened scrutiny of how technology firms in Australia communicate optional features, bundled services and price increases.
For now, Australian Microsoft 365 consumers affected by the rollout have an explicit pathway to reimbursement and choice over whether to opt in to AI-enabled subscriptions or retain the older, lower-cost plan.
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