Microsoft Responds to Microsoft 365 Price Hike With Apology, Classic Plan With No AI, and Refunds for Australian Subscribers

Microsoft has issued a formal apology to its Microsoft 365 Personal and Family subscribers in Australia after fallout from a major subscription price hike linked with the rollout of new AI features. The company is now offering clearer subscription choices—including a lower-priced “Classic” option with no AI features—and refunds for eligible subscribers who make the switch, aiming to restore trust and transparency after widespread criticism and regulatory scrutiny.

Price Hike and Confusion: How Microsoft’s AI Push Sparked Outrage in Australia

In October 2024, Microsoft rolled out a significant upgrade to its Microsoft 365 Personal and Family plans in Australia, integrating advanced AI capabilities—most prominently their Copilot assistant—into consumer subscriptions. These changes brought new features, but also steep price increases, with annual rates jumping 45% for Personal and 29% for Family plans. For many subscribers, renewals soared from AU$109 to AU$159 and AU$139 to AU$179 respectively, sparking confusion and frustration among millions of Australians.​

The new AI features were introduced in an email and blog post, but Microsoft’s communication failed to make clear that a lower-priced, non-AI Microsoft 365 “Classic” option was available, or that users could switch and receive a refund of the price difference. Instead, many customers felt compelled to accept the new higher-priced plans even if they didn’t want the AI integration.​

Consumer Backlash and Regulatory Investigation

The decision quickly drew the attention of the Australian Competition & Consumer Commission (ACCC), which launched an investigation and subsequent legal proceedings against Microsoft Australia for allegedly misleading about 2.7 million customers. The ACCC charges centered on insufficient disclosure about subscription alternatives and automatic renewals at higher prices, as Microsoft updated its plans with Copilot AI but did not adequately inform customers of all options.​

Microsoft’s failure to detail the existence of the “Classic” plan—retaining the previous price and omitting AI—was a key complaint. Many users expressed online that they only learned of the choice after receiving renewal notices or by seeking out support themselves, leading to widespread calls for refunds and regulatory penalties.​

Microsoft’s Apology and New Approach

In response to growing public pressure and legal scrutiny, Microsoft issued a public apology on November 6, 2025. For the first time, it clarified the full set of options for subscribers:

• Option 1: Stay on Current Microsoft 365 Plan

  • Subscribers can remain on the new Personal or Family plan, which now includes Copilot AI and ongoing feature updates, for AU$16 or AU$18 per month (tax included). No action is required to continue on these plans.​

• Option 2: Switch to Microsoft 365 Classic—And Get a Refund

  • Users who do not want Copilot AI or new feature updates can change to the “Classic” plan, which sticks to the previous price (AU$11 or AU$14 per month, tax included) and offers the essential Microsoft 365 apps with regular security updates.

  • If subscribers switch to Classic by December 31, 2025, they are entitled to a refund of the price difference from their first renewal after November 30, 2024. Refunds will be processed within 30 days and appear in customer Microsoft accounts. Recurring billing must be enabled to maintain the Classic subscription.​

Building Back Trust in Longstanding Relationships

As a company active in Australia for over four decades, Microsoft expressed regret for falling short of its principles around trust and transparency. “We fell short of our standards here, and we apologise. We will learn from this and improve,” the company stated in its subscriber outreach, emphasizing its commitment to clarity and transparency moving forward.​

Acknowledging the disruption, Microsoft has tailored customer emails to provide explicit instructions, plan comparisons, and refund details based on individual subscriber status—whether Personal or Family and monthly or annual plans. This level of direct communication is part of a broader move to rebuild trust with customers and respond to feedback from both everyday users and consumer advocates.​

What Subscribers Need to Do

Eligible Australian customers must act before December 31, 2025 to switch to the Classic plan and receive a refund. Microsoft encourages users to review their subscription details and make the choice that’s right for them, with greater effort now placed on clear, honest communication regarding product features and pricing.

Subscribers who stay with the AI-enabled plans will continue to receive Copilot updates and new features as part of Microsoft’s evolving productivity suite, while those who prefer Classic can avoid paying for features they do not want or need.​

Regulatory Outlook and Industry Impact

With ACCC oversight continuing and broader tech industry interest in responsible pricing during AI rollouts, Microsoft’s apology, plan adjustments, and refund program may serve as a precedent for future subscription changes in high-impact markets. The case highlights the need for transparency in software pricing and the challenges of balancing innovation-driven increases with consumer choice and trust.