Microsoft Cut OneDrive Family Storage by Two-Thirds

Microsoft's Redmond, Washington campus. The company is cutting Microsoft 365 Family and Premium OneDrive storage from 6TB to a shared 2TB pool. Photo via Wikimedia Commons (CC BY 2.0).

Microsoft just pulled off the most unpopular pricing move in subscription software this year, and it buried the bad news inside a good one. Starting October 8, Microsoft 365 Family and Premium subscribers no longer get 1TB of OneDrive storage per person. They get one shared 2TB pool for the whole plan. The family of six that had 6TB now has 2TB — a 66.7% cut at the same price.

The sweetener? Copilot benefits, previously locked to the primary subscriber, can now be shared with every member. Microsoft calls the whole thing "more flexible." Subscribers call it something else. The reception, in the words of one Microsoft news outlet, has been "overwhelmingly negative" — and there's already an organised campaign to make the anger visible in Microsoft's own renewal data.

What changed, exactly

The old model was simple and generous: Microsoft 365 Family and Premium let subscribers share with up to five additional people, and each person got 1TB of OneDrive storage — up to 6TB combined per subscription, for $129.99 a year. It was, by most accounts, the best storage deal in consumer cloud.

The new model: a single 2TB shared pool for the entire subscription, with no per-user quota. Under the old model, someone who hit their 1TB limit couldn't touch a family member's unused space. Now one person can use the whole 2TB if everyone else uses little. Microsoft's email to subscribers, obtained by The Verge, put it this way: "More flexible cloud storage: Your cloud storage allowance will change from 1 TB per person to 2 TB of shared storage so everyone on the plan can use the free space while keeping their own accounts and files private."

That privacy line matters: shared quota does not mean shared files. Your files stay private unless you share them. The pool is shared; the contents aren't.

Who wins and who loses

This is a genuine win for light users. A two-person household that used 300GB each was wasting 1.4TB of stranded quota under the old model; now they get a flexible 2TB and room to grow. If your family uses under 2TB total, the change is neutral-to-positive.

Everyone else loses, and the losses are steep. A family of six that used, say, 500GB each — a completely ordinary load of photos, documents and phone backups — had 3TB under the old model. Now it has 2TB. Anyone over 2TB has to buy storage back at $10 per TB per month — that's $120 a year per terabyte. As ZDNET's analysis noted, the base Family subscription itself costs roughly $130 a year, just over $10 a month. A family that wants its old 6TB back would effectively double or triple its bill.

The math gets uglier the heavier the user. Buying back the full lost 4TB would cost $480 a year — nearly four times the subscription price. Microsoft is, in effect, selling you your own old storage back.

The Copilot sweetener — with a catch

The part of the announcement Microsoft would rather you read: Copilot benefits and AI usage credits, previously limited to the primary subscription owner, are now shareable with all members of Family and Premium plans. Microsoft is also introducing a shared AI usage allowance for the whole plan. Premium and Pro subscribers can purchase additional AI credits.

There's an honesty problem here, though. One of Microsoft's most engaged customers — Usama Jawad, a Neowin editor and Microsoft 365 Family subscriber since 2020, who called it his favourite Microsoft product in 2022 — says he doesn't even use the 60 AI credits bundled in his subscription. "ChatGPT, Claude, and Gemini suit my productivity and work needs better," he wrote. Microsoft is offering everyone in the family more of a benefit many of them never wanted, in exchange for taking away the thing they actually pay for: storage. "I hate Microsoft 365 now, it's no longer my favorite product," Jawad wrote. That quote, from a 2020 loyalist, is the whole story in one sentence.

The backlash is getting organised

This isn't just grumbling. A Reddit post by user gc_wood is encouraging unhappy subscribers to turn off automatic renewal on their Microsoft accounts — and to explain in the cancellation survey that the storage reduction is the reason. The point is strategic: turn off auto-renew and Microsoft's renewal forecasts will show the damage months before the changes reach existing subscribers, creating pressure to reverse course. Auto-renewal can be turned back on later.

"Some users have already started following this advice," Neowin's Sayan Sen reported, noting the post "has been upvoted fairly overwhelmingly." A Mobilesyrup writer captured the mood: the reduction "really kills the value of the Microsoft 365 subscription" — and added the salt in the wound, last year's price hike "because it added AI features no one asked for."

The timeline: you may have 18 months — don't trip the upgrade trap

New and upgraded subscriptions are on the new model now, as of October 8, 2026. Existing Family and Premium subscribers keep the old model until their first renewal on or after May 2, 2027 — Microsoft will email before the switch. Some existing subscribers in eligible markets may get "transitional bonus storage" at no extra cost, but Microsoft hasn't said how much, who qualifies, or where.

Watch the upgrade trap: upgrading plans — say, Family to Premium — before May 2, 2027 triggers the shared-storage model immediately. Downgrading before that date does not. And if you renew in April 2027, you've effectively bought yourself nearly another year on the old terms. Check your renewal date before you touch anything.

Our take: shrinkflation, dressed as generosity

Let's call this what it is. Microsoft raised the Family price to $129.99 a year in January 2025, justifying it with Copilot features people hadn't asked for. Now it's taking away two-thirds of the storage — the feature people had specifically asked for, and the reason many subscribed — while pointing at the AI credits as compensation. The credits, by Microsoft's own design, were "embarrassingly low" to begin with. This is shrinkflation, and the "flexibility" framing is an insult to subscribers' intelligence. Nobody's family plan was crying out for the ability to pool 2TB; they were quietly enjoying 6TB.

There is a defensible reading, for the record: stranded per-user quota is genuinely wasteful, and the old model subsidised heavy users off light ones. But Microsoft could have moved to a shared 6TB pool — or even 4TB — and nobody would be organising renewal boycotts. It chose 2TB because storage costs money and AI compute costs more. The strategy is visible in the pricing ladder too: Personal at $99.99 a year for 1TB leaves heavy users nowhere to go except back up to Family and its $10-a-month-per-terabyte add-ons. The ladder was engineered. The cut was calculated. The backlash was predictable.

Frequently asked questions

When does this affect me? New and upgraded subscriptions from October 8, 2026. Existing Family/Premium subscribers transition at their first renewal on or after May 2, 2027.

Can other family members see my files in the shared pool? No. The quota is pooled, but files stay private to each account unless explicitly shared.

What if I use more than 2TB? You can buy additional OneDrive storage at $10 per TB per month, added to the shared pool. Subscriptions can go up to 10TB total. If a plan exceeds its limit, Microsoft says users can keep accessing files for up to a year while managing storage — what happens after that is undisclosed.

Are Basic and Personal plans affected? No. Microsoft 365 Basic (100GB) and Personal (1TB) keep their individual allocations. Microsoft 365 Pro gets a 5TB shared pool, at $99 a month.

By Daniel Rao

Daniel Rao covers AI infrastructure, cybersecurity and the business of the frontier labs for TechPulse USA.

Sources

Neowin (Pradeep Viswanathan, Oct 8; Sayan Sen, Oct 9; Usama Jawad editorial, Oct 9); Pureinfotech; Office Watch; The Verge's subscriber email as reported by NewsATW and Mobilesyrup; Thurrott; ZDNET via metapress. Direct quotes from Microsoft's subscriber email and Microsoft support notes as reported by those outlets.

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