Microsoft 'deeply sorry' as outage threatens billions in losses and exposes Australia's reliance on foreign tech

On Friday morning, Australians who opened their Microsoft email and apps found them not working. For roughly 18 hours, millions of users, organisations and businesses around the world were cut off before services began to recover. Microsoft has since said it is "deeply sorry" and that it has "addressed the underlying issue".

The company says the failure was a technical fault, not the result of a cyber-attack or of AI agents, and that it is restoring services gradually so the recovery stays stable. It has suggested the cause may lie in the settings applied to the servers that keep Microsoft 365 running. Charles Lamanna, the company's executive vice-president of Copilot, said Microsoft regretted the disruption to customers and was working to fix it.

In Australia, experts warned that the economic damage could run into the billions of dollars and might force some small businesses to close. Ashwin Pal, a partner at the risk advisory firm RSM Australia, said his clients had activated business continuity and disaster recovery plans, but that many businesses had no fallback at all. A protracted event like this, he said, can easily be "the straw that breaks the camel's back" for smaller entities. He also said he was flabbergasted that it had happened, and that Microsoft had pushed out a change that should have been tested. Its evident struggle to recover, he added, raised bigger questions.

The Australian Computer Society renewed its call for the federal government to urgently review which critical IT systems depend on a single provider, and where backup options could keep the economy running. Its chief executive, Prins Ralston, said the outage had exposed Australia's reliance on foreign technology, particularly for small businesses. Australians who could not get paid, send an invoice or reach a government service, he said, are entitled to be worried.

The effects reached into public services. Hospitals and health clinics were affected, though the Australian Medical Association said there had been no impact on patient care. Its president, Dr Michael Bonning, said some facilities went back to paper for scripts, because logging in to many prescribing systems requires multifactor verification that depends on access to Microsoft-supported email. Courts in South Australia and Victoria reported that their email systems were hit, and many schools across the country were affected. Service NSW encouraged customers to delay visits to its service centres.

Federal departments were also disrupted, including national security agencies. Mike Burgess, head of the domestic spy agency Asio, said its systems operate on multiple levels and had been affected on one level, "but not completely".

The disruption was global. In the UK, healthcare systems were disrupted and several police forces asked people not to report crimes online and to phone instead. US government offices were affected, including congressional offices that rely heavily on Outlook; the US House's chief administrative officer sent a campus-wide alert to staff on Thursday, Politico reported. In Japan, the shipping company Sagawa Express could not take online reservations for some services at airports and train stations, and the pharmaceutical company Taisho had to handle orders by phone.

When Wall Street opened, Microsoft shares dipped 1.1% to $516.86. What to watch now is whether Microsoft explains in full how an untested change could cause this, and whether Canberra acts on calls to map which critical systems hang on a single foreign provider.