Microsoft 365 slashes storage capacity for shared accounts amid industry-wide shortages

Microsoft just made a major change to its storage policy affecting Microsoft 365 subscribers with shared accounts. According to the company, the Microsoft 365 Family, Premium, and Pro plans will move from an assigned 1TB of cloud storage for each user to a shared 2TB for all users. This means that a subscription shared across six users will have its total cloud storage capacity slashed by 66.6%. This change will take effect on subscription renewals after May 2, 2027, unless the subscribers change their plan earlier. Some affected subscribers might also receive bonus storage when their account switches to the share limit model, although the company did not mention its eligibility requirements.

The company said it made this change so that the cloud storage allocation for Microsoft 365 subscribers will automatically go where it’s needed, and that individual users are less likely to hit individual storage limits. Aside from that, it also said that unused storage can benefit the entire family, and that any additional storage that the main subscriber purchases will benefit everyone.

This new setup is indeed advantageous for subscribers who only have one power user that uses up the majority of the cloud storage capacity, while all the rest take up a fraction. It would also be cheaper for an individual who intends to use more than 1TB of cloud storage to just switch to the Microsoft 365 Family plan (which costs $129.99 annually) instead of getting the Microsoft 365 Personal plan ($99.99 annually) and paying an extra $9.99 per month or $119.88 per year to bring their total cloud storage capacity to 2TB. However, if you have four users under one account using 500GB each, you will be forced to purchase additional capacity, starting at $1.99 per month for 200GB.

While Microsoft hasn’t increased the prices of its subscription, this move simultaneously reduces the burden on its storage servers while forcing accounts with multiple large users to purchase storage separately. This seems like a reaction to the storage shortage hitting the industry, with hard drive prices surging by 46% from September 2025 to January 2026. Enterprise SSDs have been hit hard, too, with 30TB drives now costing $22,600 while supply remains sold out until 2027.

Affected users could change their cloud storage providers, but even Google has been affected, with the company cutting the free cloud storage limit from 15GB to 5GB pending extra security measures. Even Backblaze, which offers “unlimited” backups, updated its terms of service to potentially throttle or terminate accounts that exceed “typical usage patterns” or “places an undue burden.” Users who have grown tired of paying monthly to secure their data could alternatively set up a NAS and populate it with the best hard drives — although this might be pricey in the short term and requires some setup, it could potentially save you hundreds, if not thousands, of dollars in the long run.

Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.