The Microsoft outage, which crippled popular services like Outlook and Teams, cost users over half a billion dollars, according to one expert, as the recovery timeline remains uncertain.
Friday's outage lasted over 24 hours and prevented people from performing essential functions such as sending emails, managing calendars, and hosting virtual meetings.
Microsoft had over 450 million paid user licenses as of January 2026, according to its financial reporting, and over one billion devices connected to its services.
Disruptions and financial losses from the outage could result in numerous insurance claims, but the overall hit to insurers is expected to be limited, Mario De Cicco, vice president of European financial institutions at Morningstar DBRS told Reuters.
De Cicco estimated global insured losses from the incident at between US$300 million ($443 million) and $500 million ($738 million).
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Microsoft also faced an outage with its 365 services in January this year and in October last year. Last month, it reported an outage of its Azure cloud platform that impacted its suite of productivity software and a range of industries worldwide.
Experts say the latest outage is a wake-up call for companies and users to have a backup plan for when services go offline.
RMIT Associate Professor of engineering Mark Gregory said companies in Australia have already been advised to plan for national telephone network outages after a series of failures.
"So if you're a Telstra customer, you need to have an Optus SIM card or something on another network as a backup," he told SBS News.
"If you're an Outlook or Microsoft user, you keep a Google or Gmail account as a backup so that you're still able to communicate or receive emails," Gregory said.
It's also important for companies, businesses, individuals and families to also have backups of software systems so that alternatives are available when one system fails, he adds.
He said businesses should also consider backups for human resource progams, billing, invoicing and accounting software.
"Unfortunately, I see many businesses that are not prepared to look at having that redundancy or backup approaches, and they simply rely upon everything being available," he said.
"And when it's not, their staff are really just being left in limbo."
Gregory said Australian businesses should have a mechanism to claim compensation, and the government should be able to fine big tech for outages that impact productivity.
"The loss of productivity will be in the tens of millions in Australia and tens of billions globally," he added.
Microsoft said the outage — one of the longest in Microsoft's history — was caused by server issues. The incident hit features tied to Exchange Online — mainly its cloud-based email and scheduling hub.
The company said a core process on the affected servers had become "overwhelmed". Once that happened, automated health checks within the system started shutting them down, tech expert Val Quinn told 7News on Saturday.
While the solution to the outage was to turn on the servers again, it wasn't that simple, Quinn added.
By the time the Microsoft engineers were ready to flip the switch on again, there was a huge reservoir of emails and messages queued up. Loading them all on in one go could create more problems, so they had to carry out the switch-on in stages, Quinn said.
Doug Jacobson, Professor of Electrical and Computer Engineering at Iowa State University, said in a report on The Conversation that the pent-up messages were akin to a major highway crash.
Once the staged switch-on happens, email traffic does not instantly return to normal speed. Processing those long queues without overwhelming the newly restored servers takes time – typically hours to days.
While many are now able to access their Outlook and Teams, the issue is still being fixed and we don't know when all services will be completely up and running.
Microsoft services have been slowly coming back online, but the company had offered no timeline for a return to regular operations as of Saturday morning.
Dr Mohammad Goudarzi, from Monash University's Faculty of Information Technology, said engineers are working to contain the outage's impact and restore services.
"Normally, in large-scale and interconnected systems, like Microsoft cloud platforms in this case, detecting a disruption may be quick, but identifying its underlying cause can take considerably longer," he told SBS News.
"These disruptions can also continue after access returns. Organisations may need to clear backlogs, check unfinished work and catch up on delayed decisions. Restoring the technology is only one part of restoring normal operations."
Microsoft said on Saturday morning it is "seeing encouraging recovery progress".
Its social media post goes on to say service availability and email performance are " improving across a growing portion of affected infrastructure".
With additional reporting from Reuters
