Microsoft Draws Hard Line for OneDrive Storage Quotas

The Promise of Unlimited OneDrive Storage is Long Gone

When Microsoft was aggressively pushing organizations toward Microsoft 365, one of the incentives for enterprises considering a cloud deployment was a promise of effectively unlimited OneDrive for Business storage. The marketing phrase at the time was “beyond 1 TB to unlimited.”

Things started to get more restricted around 2022, when Microsoft set 5 TB as the upper limit for enterprise accounts. The opportunity existed to extend the limit to 25 TB by asking Microsoft Support to invoke the “Level 2 Expansion” process once accounts approached within 10% of the 5 TB quota. Once Microsoft Support approved the expansion request, the tenant became eligible to assign OneDrive quotas of up to 25 TB to individual users.

Storage costs money, and despite Microsoft doing its best to convince users to store everything in OneDrive and changing its applications to follow suit, cost accountants have clearly pointed out that delivering 25 TB of storage to end users is expensive. The result is a firm 5 TB limit unless you’re willing to pay.

Letting Customers Know that Bad News is Coming

The policy shift became apparent in early September 2026 when Microsoft sent message center notification MC1465765 to tenants that had been granted storage expansions beyond 5 TB. The bad news informed tenants that users who had gone past 5 TB will enter a read-only state between November 2026 and February 2027 until the account dropped beneath the 5 TB quota. Presumably, users can still delete content while in read-only mode; otherwise, they would have no practical way to reduce storage consumption below the quota threshold.

To check the current storage usage by users, you can use the SharePoint Online Get-SPOSite cmdlet or read the usage data from the Graph. The latter is the same data that’s used by the Microsoft 365 admin center.

MC1465765 only went to affected tenants and isn’t available on sites that mirror message center posts. However, its content is well known and validated. Seeking formal explanation of what’s going on, I checked the OneDrive service description. This page points to a PDF detailing product feature availability across Microsoft 365. Here we learn that E3 and E5 users benefit from “up to 5 TB of initial OneDrive storage” (Figure 1).

The Pay As You Go Play

In addition to forcing customers who benefited from a perfectly valid expansion process to clean up their OneDrive accounts, Microsoft published MC1477185 (22 September 2026, Microsoft 365 roadmap item 562352) to announce Pay-as-You-Go storage for OneDrive for Business. This is a metered $0.20/GB/month billing option that’s available in preview for all tenants now. General availability is scheduled for November 2026, with deployment across all Microsoft clouds expected to complete in early December 2026.

Clawing back storage from some customers and launching a PAYG offer to sell them more OneDrive storage seems odd, to say the least.

To buy additional OneDrive storage using PAYG, you’ll need to create a billing policy that’s linked to a valid Azure subscription. You then link the billing policy with the Microsoft 365 OneDrive storage option (Figure 2).

After creating the billing policy and assigning it to OneDrive storage, you can edit user accounts to update their OneDrive storage quota from the current 5 TB limit. The PAYG agreement can be limited to specific accounts or apply to all accounts in the tenant.

Alternatively, instead of buying on a PAYG basis, tenants can buy OneDrive storage capacity packs sized to whatever quota they want to assign to specific accounts. In either case, a single user cannot exceed 25 TB of OneDrive storage.

An Unfair Approach

I’m sure Microsoft will say that the extended 25 TB storage was only used by a relatively few tenants and that moving to a PAYG model is a fairer way of sharing cloud resources in a multi-tenant environment. That’s the normal marketing position taken when these kinds of events happen.

I think the way Microsoft is handling the situation is unfair. They should have frozen the set of tenants who had the extension so that no other tenants could benefit and no new accounts in those tenants could expand past 5 TB. If only a relatively small number of tenants benefited from the expansion process, it’s difficult to see why Microsoft would choose to alienate those customers. Any financial benefit for Microsoft seems unlikely to outweigh the goodwill lost among tenants that followed the rules for a Microsoft-approved process.

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