Microsoft reneges on 'unlimited' OneDrive storage promise for Office 365 subscribers

Scrooge McDuck is now in charge of Microsoft's consumer cloud division.

That's not literally true, of course, but a surprise announcement tonight from the division responsible for the consumer OneDrive service could easily have been written by Mr. McDuck. The new rules roll back a signature feature of the OneDrive service and renege on an extravagant promise that the company made just over a year ago.

On October 27, 2014, with a great deal of fanfare, Microsoft announced that its Office 365 subscribers would all be upgraded to "unlimited" OneDrive storage plans.

Here's the graphic it included as part of that announcement. I've highlighted the promise beneath it.

At the time, in a post on the OneDrive blog, Chris Jones, Vice President of the division responsible for OneDrive, was definitive in his announcement:

Today, storage limits just became a thing of the past with Office 365. Moving forward, all Office 365 customers will get unlimited OneDrive storage at no additional cost. We've started rolling this out today to Office 365 Home, Personal, and University customers. The roll out will continue over the coming months

During the past few months, I've heard from several dissatisfied Office 365 subscribers who never received their unlimited storage upgrades.

Now we know why.

In a terse announcement tonight, Microsoft announced it plans to renege on that promise. In fact, the company is scaling back its free storage across the board.

Here's the key part of tonight's announcement:

• We're no longer planning to offer unlimited storage to Office 365 Home, Personal, or University subscribers. Starting now, those subscriptions will include 1 TB of OneDrive storage.
• 100 GB and 200 GB paid plans are going away as an option for new users and will be replaced with a 50 GB plan for $1.99 per month in early 2016.
• Free OneDrive storage will decrease from 15 GB to 5 GB for all users, current and new. The 15 GB camera roll storage bonus will also be discontinued. These changes will start rolling out in early 2016.

Microsoft blames a few greedy storage users for the change in heart. "A small number of users," they wrote, "backed up numerous PCs and stored entire movie collections and DVR recordings. In some instances, this exceeded 75 TB per user or 14,000 times the average."

That shouldn't be surprising. If you advertise "unlimited" cloud storage, perhaps you should expect that some people will take you at your word and move large collections to the storage space you so generously offered? Did no one consider the possibility that some customers with large digital media collections would find this offer insanely attractive?

Apparently not. Or at least no one with access to an Excel spreadsheet was able to calculate the costs from those heavy users. (The owners of "all you can eat" buffets could easily have told them what was in store.)

A terabyte is indeed a lot of space, and most Office 365 subscribers will never come close to that limit. But anyone who has a OneDrive collection larger than the 1-TB limit needs to begin making other plans.

For those who have already exceeded the new limit, here's what happens next:

• Anyone with more than 1 TB of file storage will be notified and can continue to keep the greater storage for at least 12 months. Although Microsoft doesn't say so, it's reasonable to expect that those users will be unable to save any new files to their swollen cloud accounts until the total storage drops below the new limits.
• Anyone unhappy with the change can get a pro-rated refund on the remaining Office 365 subscription term.
• Any holder of a free OneDrive account with more than 5 GB of storage can continue to access those files for at least 12 months after the changes go into effect early next year. In addition, they can redeem a free one-year Office 365 Personal subscription (credit card required), which includes 1 TB of OneDrive storage.

In the past year, the OneDrive team has been in disarray.

Early in the Windows 10 preview cycle, the company removed a major feature that it had launched with Windows 8.1, dropping the ability to sync "placeholders" of files stored in the cloud. At the time, a OneDrive spokesperson promised that the feature would return before the end of 2015, although it looks increasingly likely that that promise will also fall short.

The unified sync Windows 10 sync client combining the OneDrive consumer service with OneDrive for Business is now available as a private preview release but hasn't yet reached the public.

Chris Jones was abruptly reassigned from his duties as head of the division in March, taking the summer off and then returning this fall "in a role yet to be publicly shared." That sort of personnel move, at a time when the division was supposed to be in a full sprint toward the launch of Windows 10, isn't a good sign for those expecting stability.

At the same time it made the consumer OneDrive announcements, Microsoft also told its Office 365 business and enterprise subscribers that they could expect unlimited storage in OneDrive for Business.

Microsoft declined to comment on how today's announcements affect those customers.