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Microsoft said Thursday it will refund approximately 2.7 million Australian customers following accusations by the nation’s competition regulator that the tech giant deliberately concealed cheaper subscription options when it raised prices for its Microsoft 365 service. The Australian Competition and Consumer Commission filed court action last week alleging Microsoft misled subscribers by presenting only two choices — accept a price increase tied to new artificial intelligence features or cancel — while failing to disclose a third option for a lower-priced plan without AI capabilities. Microsoft increased its personal plan subscription by 45 percent to $159 annually and its family plan by 29 percent to $179 when it integrated its Copilot AI assistant in October 2024.
In a message to customers, Microsoft apologized for what it called falling short of its standards and said subscribers who switch back to “Classic” plans without AI features before year’s end will receive refunds dating to November 2024. However, ACCC Chair Gina Cass-Gottlieb said the regulator will continue pursuing the case in court, seeking penalties and legal costs despite Microsoft’s refund offer. “All businesses need to provide accurate information about their services and prices,” Cass-Gottlieb said when announcing the legal action. The U.S.-based company could face substantial penalties if the court rules in the ACCC’s favor, with the regulator signaling its intent to establish a deterrent for similar conduct by other firms.
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