ZDNET’s key takeaways
- Microsoft 365 Family and Premium subscriptions are about to change.
- The new plans offer shared pools of AI usage credits and OneDrive storage.
- Some subscribers could be forced to move data or pay double or triple their current rates.
If you’ve been to the grocery store recently, you’re probably familiar with the phenomenon of shrink inflation—where the price of a bag of chips or a candy bar stays the same, but the product itself gets smaller.
Microsoft 365 subscribers are about to experience the cloud version of the shrinkflation. Microsoft announced today that it will be making changes to its Microsoft 365 Personal, Family, Premium and Pro subscriptions. The company positioned the changes as giving subscribers “more flexibility with their AI and cloud storage benefits.” That may be true, but the net effect on subscribers who take full advantage of these subscriptions could be a huge price increase.
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The changes, which are planned to be rolled out “in the coming months”, will affect shared AI usage and cloud storage benefits.
New storage and AI frontiers
The shrink will hit the hardest on the shared OneDrive storage available through all of these plans. Currently, if you have a Microsoft 365 Family, Premium or Pro plan, each member has a fixed OneDrive storage allowance of 1 TB. If you are the owner of one of these plans and you have used all five of your available shared slots, your family has a total of 6 TB of storage available.
After the changes take effect, these plans will receive a shared storage pool for the entire subscription. Each family member’s accounts and files remain private, but their usage is deducted from the shared pool. And the shrinkage is significant: instead of 6 TB of storage divided evenly among six shared account holders, Microsoft 365 Family and Premium plans get a total of 2 TB of shared storage.
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Microsoft 365 Pro — a new plan that quietly launched in September — gets 5 TB of shared storage and the highest available AI usage limits, but that plan also comes with a hefty price tag of $100 per month.
For Microsoft 365 Family and Premium subscribers who use more than 2 TB of total storage across all accounts and are unwilling or unable to reduce their usage, the shrinkage will translate into current dollars-and-cents inflation. The basic cost of a Microsoft 365 Family plan is $130 a year, or just a little more than $10 a month. Every 1 TB of additional OneDrive storage adds $10 per month to the subscription price. So even if your family used about half of your current total, your bill could double or triple.
The change to AI benefits should be a little less painful. Currently, Copilot usage credits are only available to the subscription owner and cannot be shared with family members. After the changes take effect, family members can share AI usage credits, and the subscription owner can manage AI access for younger family members.
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Additionally, these plans will switch to a single AI usage allowance that can be shared by all family members. Premium and Pro subscribers will have the option to purchase additional AI usage credits.
According to a Microsoft spokesperson, new and upgraded subscriptions will include shared storage starting October 8, 2026. Customers with an existing subscription will move to shared storage at their first renewal on or after May 2, 2027, and will be notified in advance.
Why is Microsoft doing this?
The most likely reason is to hook enthusiasts who take advantage of the 6 TB of storage included with a family subscription to put together their own personal data storage – just use a second free Microsoft account, assign that account one of your shared subscription slots, and top up that OneDrive storage. You can even use the sharing feature to make the storage of that secondary account available in your main account.
This isn’t the first time Microsoft has dramatically cut cloud storage allotments for OneDrive subscribers. In 2014, the company offered “unlimited” OneDrive storage for Office 365 subscribers. A year later, the company reneged on that promise. As I noted at the time:
Microsoft [blamed] some greedy storage users for the change in the heart. “A small number of users,” they wrote, “back up many PCs and have stored entire movie collections and DVR recordings.
Moving to shared storage and AI use brings Microsoft’s plans into alignment with its main competitors. Google One, for example, includes 2 TB of shared storage for 6 people, plus AI credits, for $100 per year; a 5 TB plan costs $200 a year and includes additional AI credits. Apple sells shared storage through iCloud+ plans and with Apple One plans, which offer Apple TV, Apple Music and other subscriptions.
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For the majority of Microsoft 365 subscribers, this change will be imperceptible. It is likely that most family plan subscriptions will use less than the 2 TB allotment. But I suspect that a significant percentage of subscribers will use more than the new limits. This group includes many of Microsoft’s most loyal customers, the kind who have been encouraged for years to take advantage of the generous 1 TB per user allotments with these plans. I expect to hear some very loud hollering from these customers.