Microsoft’s move to reverse a controversial price hike has failed to head off a lawsuit lodged by Australia’s market regulator, which says it will continue to pursue the tech giant for penalties that could total up to A$50 million ($59m).
LATEST: After three days of blunders, Microsoft delivers on 365 refund - but some of the fineprint still annoys readers
Meanwhile, numerous New Zealand customers have told the Herald they can’t claim the Australia-New Zealand-wide refund because of technical foul-ups (much more on which below).
“Microsoft’s recent offer to its customers does not arise from a settlement of the ACCC’s court action,” Australian Competition and Consumer Commission chairwoman Gina Cass-Gottlieb said in a statement to the Herald.
“We continue to seek penalties, injunctions, declarations, effective consumer redress, and costs in court,” Cass-Gottlieb said.
The ACCC lodged legal action against Microsoft last month, calling its communication around 365 pricing “misleading” for some 2.7 million customers.
Earlier, New Zealand’s Commerce Commission sent the firm a letter, warning of potential Fair Trading Act breaches.
From October last year through to early this year, Microsoft emailed New Zealand customers to say the price of a 365 Family aannual subscription was increasing from $179 to $229 (a 28% increase) and the price of a 365 Personal subscription was rising from $129 to $179 (a 38% increase).
Microsoft said 365 (which includes Outlook, Word and other popular apps) was being boosted with the addition of its Copilot AI (artificial intelligence) chatbot. It did not mention the option for customers to continue with their existing pricing if they did not want Copilot.
That “Classic Plan” option only appeared if a customer went to cancel their subscription.
In an email sent this morning, Microsoft offered New Zealand and Australian customers the opportunity to return to their old 365 pricing, with the difference they had paid in the meantime refunded.
“We fell short of our standards,” Microsoft said in the email, which finished with a button customers could click if they wanted to take up the refund offer.
But a number of Herald readers who clicked on the offer encountered glitches, which appeared to affect anyone who tried to claim Microsoft’s refund.
It was only available for the Personal, not the Family version of 365 and Kiwi customers were being asked to supply an Australian billing address.
“I arrived home at 5.30pm today to find the email and tried the link supplied. It is still only set up for an Australian address,” reader Karen Gabolinscy told the Herald.
“When I went to use the ‘message us’ pop-up service, it told me I was 1140 in the queue! As at 5.52pm. I am now down to 1068 in the queue.”
She added, “The call centre seems to be getting through 274 calls an hour, so its going to be another three hours before they get to me in the queue.”
Another reader, Gisborne man Chris Henwood, complained he only had the option to switch back to the “Classic” 365 Family plan for $18 a month - or $216 per year, higher than the $179 he was paying before the price increase. $179 was also quoted in Microsoft’s offer email, he said.
Microsoft Australia-New Zealand did not immediately respond to a request for comment. The firm’s PR company said, “Some subscribers eligible for the refund received an incorrect link. We apologise for the inconvenience and have sent them new emails with the correct link.”
(UPDATE: As a 365 Family subscriber, this reporter got the first email at 9.38am and the corrected email at 11.57pm. Two readers said their “corrected” email still linked to the Australian billing site. I’m not sure where in the world I landed but my screen displayed the below error message.)
Tech industry veteran Robin Paterson, a former Hewlett-Packard New Zealand senior manager, who also received the 365 offer at 9.38am told the Herald: “The email says that the offer applies in New Zealand but it doesn’t work here.”
“If our Commerce Commission had acted instead of sitting on their hands, New Zealand customers might have had the offer weeks ago.”
Michael Davison, a professor at Auckland University’s School of Psychology, objected to some of the refund’s fine print.
He noted that the “Classic” version of 365 Family would not include Copilot, as he expected, but Microsoft’s offer terms also included the line (which he forwarded) the Family edition “may not receive new feature updates”.
“It worries me that I may now be stuck forever in Word/Excel/PowerPoint etc 2025 Edition. I guess I’ll get security updates, but that wasn’t explicitly mentioned,” Davison told the Herald.
Others brought up the same drawback. One assumed security updates would not be included without Copilot. Microsoft has been asked for comment.
And another it was not a new development, reader Wayne Smith was irked by the restricted nature of Copilot on the 365 Family plan. Only the bill payer gets access to Copilot, not the one to five other people on the plan, and then with tight usage limits (the 365 Family feature page does not feature a live link to the limits but they are listed here).
Another reader, Graham Rostron-Wood, who is also a 365 subscriber, said he tried the link after the 11am official “go live” and it still did not work (it did not work for Paterson after 11am either).
He was told in a support chat:
“Thank you for your patience. I’ve co-ordinated this case with our support team and confirmed that there is an issue with the link. The case has now been escalated to the appropriate team for resolution.
“Please allow two–three business days for us to address the issue, after which a new link should be generated so you’ll be able to successfully switch to the M365 Family Classic plan and receive a refund.”
He was also told in the same support chat:
“It appears that the link only works for users who have the M365 Personal plan. Right now, we are working on resolving the issue so M365 Family users can switch and get a refund.”
Palmerston North reader Richard Ram said he clicked the button on the bottom of the email to claim the refund and return to a Classic account – but he could not because Microsoft’s system was asking him for an Australian billing address.
“The subscribe button, when processing the payment, shows the button greyed out, with the word ‘Loading’,” Ram said.
“I waited and waited, then saw this:”
Late on Thursday afternoon, the digital strategist continued to encounter a series of error messages.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.