Dodgy Microsoft Repents With Tens Of Millions To Be Paid To Office Users After ACCC Investigation

Microsoft who is under fire from the Australian Competition & Consumer Commission (ACCC)  is today preparing to refund millions of dollars to customers after allegedly misleading consumers into paying for unnecessary AI Copilot subscription features, which many users claim they never wanted in the first place.

The Federal Court case, launched by the ACCC, accuses Microsoft of overcharging millions of Australians through its Microsoft 365 (MS365) subscription service by automatically adding its AI-powered “Copilot” feature to plans without clearly informing users that a cheaper, non-AI option was available.

According to the regulator, more than 2.7 million Australians could be eligible for refunds of up to $50 per month, depending on how long they were charged for the additional Copilot fee.

Microsoft could face a penalty of up to $50m if found in breach of Australian consumer laws. Microsoft MS365 plans, include access to popular programs such as Word, Excel and PowerPoint.

The ACCC alleges that Microsoft told customers they had only two choices: either switch to the higher-priced, AI-integrated plan or cancel their subscription. What Microsoft failed to disclose was a third option—the “Classic” plan—which would have allowed users to keep their core Microsoft 365 apps at the original, lower price without the Copilot integration.

According to the ACCC, this omission was a deliberate strategy to push more consumers onto the costlier plans. Under this change, the annual price of Microsoft 365 Personal rose by 45 per cent, from $109 to $159, while the Family plan jumped 29 per cent, from $139 to $179.

Microsoft’s new icons

In what has been described as a major backflip, Microsoft has admitted it failed to adequately communicate that customers could switch to a more affordable “Classic” plan that did not include the AI add-on. The company has begun contacting affected customers to apologise and outline refund options.

“This conduct concealed the availability of a cheaper plan,” said ACCC chair Gina Cass-Gottlieb, describing the situation as “very significant and serious.”

Microsoft has reportedly set aside $175 million for refunds, with analysts estimating that the company may have collected more than $200 million in excess fees from Australian customers. The company could also face further penalties depending on the outcome of the ACCC’s legal proceedings.

The issue also ensnares resellers such as Telstra and other Microsoft solution providers that bundled the affected subscriptions through third-party sales channels.

In a statement to customers, Microsoft admitted it “fell short” of its own standards.

Microsoft Copilot

“Our relationship with our customers is based on trust and transparency, and we apologise for falling short of our standards,” the company said.

A Microsoft Australia spokesperson added:

“In hindsight, we could have been clearer about the availability of a non-AI-enabled offering — not just to those who opted to cancel their subscription.”

The controversy comes as Microsoft touts the global rollout of its Copilot AI tools, which it has integrated into its popular Office suite, including Word and Excel. Chief executive Satya Nadella recently told investors that over 90% of Fortune 500 companies are using Microsoft 365 Copilot.

“PwC alone added 155,000 seats this quarter and now has over 200,000 deployed across its global operations in just six months,” Nadella said. “PwC employees interacted with Microsoft 365 Copilot over 30 million times, saving millions of hours in productivity.”

However, many users have complained about bugs, frequent crashes, and excessive security prompts tied to Microsoft 365’s new AI features — issues that have compounded frustrations over rising subscription costs.

The case underscores the growing tension between tech giants and consumers as companies attempt to monetise massive investments in artificial intelligence. Microsoft alone has spent US$88 billion (A$135 billion) on data centres powering its AI and cloud platforms this year and plans to spend a further US$30 billion in the coming quarter.

Despite refund offers, the Federal Court case remains ongoing and could result in substantial penalties if Microsoft is found to have breached Australian consumer law.