Journey breakdown · Retention and loyalty · Microsoft
Microsoft 365 and the Classic plan: where the renewal journey hid a choice
In short
The ACCC alleges that when Microsoft added Copilot to Microsoft 365 Personal and Family plans, about 2.7 million Australian subscribers were told to accept a higher price or cancel, while a cheaper Classic plan without Copilot only appeared once they started cancelling. Microsoft later apologised and offered refunds. Walked through stage by stage, it shows how a renewal journey can keep revenue in the short term and spend trust doing it.
Who this is for: Customer success, renewal and lifecycle leads at software and subscription companies, and the product and marketing teams who write price change and renewal messages.
What happened
On 27 October 2025 the ACCC began Federal Court proceedings against Microsoft Australia and Microsoft Corporation. The case is about Microsoft 365 Personal and Family, the home plans, not business or enterprise subscriptions.
According to the ACCC's allegations, as reported by the ABC, iTnews and iTWire, from 31 October 2024 Microsoft told auto renewing subscribers that Copilot was being added to their plan and that they had to accept it and pay more, or cancel. The annual price of Personal rose 45%, from $109 to $159. Family rose 29%, from $139 to $179.
The ACCC says there was a third option: Personal Classic and Family Classic, which kept the old features at the old price without Copilot. Its case is that Microsoft's emails and blog post did not mention it, and that subscribers could only find it by going to their subscriptions, selecting Cancel subscription, and reaching the next page.
These are allegations. In the sources we reviewed, the court has not yet ruled on them. Microsoft has since apologised and offered refunds, which the ACCC said was not a settlement.
Stage 1: the announcement
iTnews reports that Microsoft published blog posts about the change in late 2024 and emailed customers in January 2025. In the ACCC's example, a subscriber received an email on 9 January 2025 saying AI features were being added and that the annual price would go from $109 to $159 at their renewal on 19 April 2025.
Where it broke: the message described one change and two choices. A price change message is the moment a customer decides whether the product is still worth it to them. If every real option is not on that page, the customer is deciding with half the information.
Stage 2: the renewal reminder
iTnews reports that about seven days before renewal, Microsoft sent a further email stating the new annual charge of AUD 159.00 including taxes, and that customers could cancel to avoid it. The ACCC says customers were then charged automatically without being told a cheaper option existed.
Where it broke: the pre-renewal reminder is a good practice, and the date and amount were clear. The gap was the same one again. A reminder that says "pay more or leave" turns a customer who would happily stay on a plan they already like into a customer weighing whether to cancel. The ACCC chair, Gina Cass-Gottlieb, put it plainly: "cancelling the subscription is a decision many would not make lightly".
Stage 3: the cancellation flow
This is where the ACCC says the Classic plan finally appeared, on the page after Cancel subscription. A save offer inside a cancellation flow is common, and on its own is not a problem. The problem alleged here is that the option was available all along and was shown only to people who had already decided to leave.
Where it broke: designing a choice so that only the most motivated customers find it is a retention tactic, not a retention strategy. It quietly separates customers into those who push and those who trust the email. The ACCC said it believes many customers would have chosen the Classic plan if they had known. It also said its Infocentre, which takes consumer reports, helped identify the issue. Customers noticed.
Stage 4: the recovery
On 6 November 2025, the ABC reported, Microsoft apologised in writing, saying it "fell short of our standards" and could have been clearer that a non-AI option existed. It offered subscribers who switched to a Classic plan before the end of 2025 a refund of the extra amounts paid since the price rise, covering payments after 30 November 2024, paid within 30 days.
The recovery had its own friction. The ABC reported that some eligible Family subscribers were sent an incorrect link to an individual plan page, which Microsoft acknowledged and corrected with new emails. Customers also reported long chat queues; one said they were 1,288th in line.
Where it broke: a recovery is a journey too, usually designed in a hurry. Every customer in it is already doubtful, so a broken link or a long queue lands harder than it would on an ordinary day.
What a better renewal journey looks like
Any software or subscription business changing price or packaging can take the same four stages and design them on purpose. In our experience the useful work is to put every message a customer will receive, in order, on one wall, and read them as the customer would.
From there, a few rules hold:
- Every option a customer can choose appears in the first message, not only in the exit flow.
- The renewal reminder repeats the options, with the date and the amount.
- Save offers in a cancellation flow are a last check, never the first time a customer hears about a choice.
- Someone owns the whole sequence across marketing, billing, product and customer success.
- Recovery steps are tested before launch: links, plan types and queue capacity.
Why customer success teams should care
Price changes are now a normal part of software renewals, especially as AI features get bundled in. Customer success teams are often the last to see the customer emails and the first to hear the anger. Asking to review the full renewal sequence before it ships is part of the job.
If your team is working through onboarding, renewal and price change journeys, our customer success page sets out how we approach them: breme.com.au/customer-success/.