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When Microsoft declared a substantial cost hike for its office suite, subscribers were allegedly offered a limited selection: either accept the higher rate with artificial intelligence tools or terminate their subscription.

According to Australia's consumer watchdog, the firm supposedly did not reveal a third option that allowed customers to keep using the software at the original cost excluding the artificial intelligence feature, known as Copilot.

Legal Proceedings Initiated by Oversight Body

Australia's primary consumer protection agency has brought the technology company to the national judiciary, claiming that the firm misled around 2.7 million Australian personal and family subscribers.

The regulatory authority states that communications sent to subscribers only described a pair of options: accepting the higher price or cancelling the plan.

It is claimed that Microsoft's emails and online announcement were false or misleading, suggesting that consumers had to agree to the more expensive AI-included plans, while the only other choice was to discontinue, the head of the commission, the regulatory leader, said.

Hidden Alternative Discovered

The regulator claims that a third option, known as classic subscriptions, was available but was not disclosed from subscribers.

This plan allowed members to keep the capabilities of their existing membership excluding Copilot at the original reduced cost.

Consumers were only presented with this option when they started cancelling their subscription, as per the ACCC.

Cost Hikes and Customer Impact

Yearly subscription price for the software individual subscription rose by 45% from $109 to $159 AUD with the AI tool included.

The family plan saw a twenty-nine percent increase, going up from $139 to $179 per year.

Microsoft informed automatically renewing subscribers about the Copilot integration and upcoming cost adjustment through two emails and a blog post.

We will allege in the legal proceeding that the company intentionally omitted mention to the classic plans in its communications and hid their existence until subsequent to subscribers started the termination procedure to increase the number of consumers on more expensive Copilot-integrated plans, the chairperson added.

Essential Tools and Few Alternatives

The office apps featured in the software packages are essential in numerous individuals' lives, and given there are limited substitutes to the bundled package, terminating may not have been a practical choice for users.

Customers may have opted for the classic plan if they had been aware of all the viable options, as stated by the commission.

Probe and Potential Penalties

The ACCC's inquiry drew on a large quantity of consumer reports as well as digital discussions from platforms such as Reddit.

The regulatory body is pursuing orders including penalties, restraining orders, formal statements, customer compensation and costs.

The highest penalty could be the larger of $50 million, triple the overall gains acquired, or thirty percent of the company's modified revenue during the breach period.

Firm's Statement

Customer confidence and transparency are key focuses for Microsoft, and we are reviewing the ACCC's allegation in depth, a company representative stated.

We remain dedicated to working constructively with the oversight body and making certain our procedures meet all regulatory and moral standards.