Refund and apology for Kiwi Microsoft 365 subscribers pushed to sign up for costlier plans with Copilot AI

After being taken to the federal court in Australia for the way it bundled its artificial intelligence (AI) technology, Copilot, into its productivity software subscriptions, Microsoft has now apologised and offered to refund customers.

Australia's Competition and Consumer Commission (ACCC) said it has taken legal action against the United States tech giant for allegedly misleading 2.7 million customers over their subscription options, and for trying to push them to go with the Copilot AI technology for the Microsoft 365 plans.

This for Personal and Family Microsoft plans, which would then be charged at a higher cost than what subscribers were paying before.

New Zealand customers were also give then same "offer": the Microsoft 365 Family plan would cost $229 per annum including GST with Copilot. That was up from $179 for the Microsoft 365 Family Classic plan with the AI assistant, an increase of nearly 28 per cent.

The ACCC alleged Microsoft hid the option for subscribers to remain on the Classic plan.

Microsoft has now apologised to New Zealand customers for doing so, and said it will refund those who want to go back to the un-Copiloted Classic Personal and Family plans, the company said:

In response to the demand for advanced AI tools, we introduced AI capabilities into the Microsoft 365 Personal and Family subscriptions that we offer in New Zealand. In hindsight, we could have been clearer about the availability of a non-AI enabled offering with subscribers, not just to those who opted to cancel their subscription. In our email to subscribers, we expressed our regret for not being clearer about our subscription options, shared details about lower-priced alternatives that come without AI and offered a refund to eligible subscribers who wish to switch.

We have been present in New Zealand for more than 35 years, operating on the principles of trust and transparency. We fell short of our standards here, and we apologise. We will learn from this and improve. 

The refund applies from subscriber plan renewals after November 30, 2024, when Microsoft first announced the pricing changes.

The ACCC said the maximum penalty under Australian consumer law is the greater of A$50 million, or three times the total benefits that have been obtained and which are reasonably attributable; or if the total value cannot be determined, 30 per cent of the corporation's adjusted turnover during the breach turnover period.

In New Zealand, the Commerce Commission took a more lenient approach, with The Herald reporting the watchdog had only issued a warning letter and did not intend to commence a formal investigation into the matter.