In a rare public apology, Microsoft Corporation recently announced it would refund eligible subscribers of its Microsoft 365 service in the United States, following allegations of misleading pricing related to its AI-enhanced plans. The move comes in the wake of regulatory scrutiny in Australia, where the Australian Competition & Consumer Commission (ACCC) sued Microsoft for allegedly failing to clearly present a lower-cost, non-AI-enabled subscription option.Microsoft confirmed it would refund the difference in pricing on renewals from 30 November 2024 and urged customers to switch to the Microsoft 365 Personal or Family Classic plan by December 31, 2025 to claim. The company said the apology and refund offer reflect a commitment to transparency, acknowledging that it “could have been clearer” with its communications.
Microsoft issues global apology after ACCC lawsuit over hidden 365 plans
Microsoft’s announcement followed the ACCC’s legal action in Australia, which accused the company of “deliberately hiding” the cheaper, non-AI version of its Microsoft 365 subscription from certain customers. While the dispute originated in Australia, Microsoft stated that it had 2.7 million eligible customers in the United States affected by similar pricing concerns.In its statement to subscribers, Microsoft explained that it added AI capabilities into its Microsoft 365 Personal and Family subscriptions and admitted that it “could have been clearer” about the availability of the non-AI Classic plan. The company offered an apology and put in place the refund mechanism for eligible users.
Microsoft offers refunds after 365 pricing confusion: Who is eligible and how to claim
Eligible customers are subscribers in the United States who were on Microsoft 365 Personal or Family plans and renewed after 30 November 2024. Customers who switch to the Microsoft 365 Personal or Family Classic plan by 31 December 2025 will receive a refund covering the price difference between their then-current plan and the Classic plan. Microsoft says refunds will be processed within 30 days after the plan switch and credited to the original payment method.How to claim the refund:
- Check for an email from Microsoft notifying you of your eligibility.
- Switch your subscription to Microsoft 365 Personal or Family Classic by logging into your Microsoft account and selecting the change before 31 December 2025.
- After the switch, Microsoft will calculate the refund and process it within 30 days to your original payment method. The refund will appear in your Microsoft account once completed.
What the change involves: Plan options and pricing differences
Microsoft distinguishes between its standard Microsoft 365 subscription (with AI assistant “Copilot” and feature updates) and the Classic plan (which includes core Office apps and security updates but excludes Copilot and may not receive future feature enhancements). According to the example provided in the email to subscribers, the AI-enabled plan renews at AUD $16 / $18 (tax inclusive) per month in Australia, while the Classic version renews at AUD $11 / $14. Though these figures are Australian, they illustrate the price gap between AI-enabled and non-AI plans.In the US, while specific renewal prices were not detailed in the public statement, the refund mechanism is constructed to cover “the difference in price between plans” retroactive to the date of the first renewal after 30 November 2024. Microsoft emphasised that subscribers who already are on the Classic plan and opted to stay there do not need to take any further action.
Implications for consumers and the wider subscription market
For millions of individual and family Microsoft 365 subscribers, the refund and plan-switch offer represents a significant acknowledgement of value concerns in subscription services. Experts say the case underscores how transparent communication about plan tiers and renewal pricing is increasingly under scrutiny by regulators. Microsoft’s statement, by linking its internal decision to the Australia-based regulatory action, suggests that consumers around the world may expect improved disclosure.Subscription fatigue and rising service costs are major issues for consumers globally. With software companies adding features like AI assistants and advanced capabilities, the pressure to differentiate tiered pricing without confusing or alienating customers is growing. Microsoft’s move may set a precedent for how tech giants manage legacy product transitions and pricing transparency.
