Microsoft scales back free cloud storage for OneDrive

NEW YORK—Microsoft is pulling back in the cloud wars.

Late Monday the company announced that starting in early 2016 it would scale back the amount of free storage offered to OneDrive users and dropping the bundling of unlimited storage for customers of its Office 365 subscription service.

Under the new plans, customers currently using OneDrive for free will be dropped from 15GB to 5GB of storage space, while Office 365 Home, Personal and University customers will now get 1TB of storage included in their subscriptions.

Office 365 is Microsoft's bundling of Office and OneDrive. A Personal version starts at $6.99 per month or $69.99 per year and allows for users to install Office on one PC or Mac, one phone and phone tablet as well as get access to 1TB of OneDrive storage. A more family focused Office 365 Home costs $9.99 per month, $99.99 for the year, and allows for installation on five computers, five phones and five tablets in addition to giving up to five users 1 TB each of OneDrive.

In a blog post announcing the news Microsoft says the move was a reaction to some users taking inordinate advantage of the unlimited storage offering of Office 365, with "a small number of users" backing up numerous PCs and storing entire movie collections and DVR recordings. According to the post, some users exceeded 75 terabytes of storage.

Under the new plans, OneDrive users who don't subscribe to Office 365 can upgrade from 5GB to 50GB for $1.99 a month or can upgrade to Office 365 and get 1TB. The company is removing the option to purchase 100GB or 200GB of additional storage to new customers, though existing customers will still be able to use those plans. Users with additional storage gained by a promotion (such as purchasing a new phone) will still be able to utilize that storage for as long as that promotion lasts.

The move does not look to affect business users.

If you have over 5GB stored in OneDrive (or over 1TB for Office 365) after the change takes place Microsoft says you can still access your files for at least twelve months, so no need to immediately pull everything down from the cloud.

The news comes as a bit of a surprise as it was only last year that Microsoft announced that they were expanding their cloud offerings and including unlimited cloud storage to Office 365 subscribers, a move that was widely praised at the time.

The decision also seems to go against CEO Satya Nadella's emphasis on turning Microsoft into a mobile- and cloud-first company, as Microsoft's cloud storage options now seem pricier than rivals from Apple and Google. Apple offers 5GB free for it iCloud offering, with 50GB available for $0.99 per month, 200GB for $2.99 a month and 1TB for $9.99 per month. Google Drive offers 15GB free with 100GB available for $1.99 a month and 1TB for $9.99.

Follow Eli Blumenthal on Twitter @eliblumenthal