Microsoft (MSFT.US) 365 services experience second major outage this year, affecting multiple government agencies and enterprises worldwide

According to news from Zhitong Financial APP, service outages for Microsoft (MSFT.US) products such as Outlook, Teams, and Copilot continued into the Asia-Pacific business hours on Friday after affecting thousands of users in the United States. The tech giant is still working to fix the server problem it blames as the source of the malfunction.

The outage has affected government agencies in Australia, Japan, and the United States, as well as companies like OpenAI and Anthropic. This is the second outage for Microsoft's 365 service this year, raising concerns among the public: repeated failures may prompt enterprise customers to question Microsoft’s reliability.

In its latest update, Microsoft stated that it had made adjustments to the affected servers, but the changes did not lead to a sustained recovery; partial service recovery was observed in regions where the adjustments were implemented.

“We are exploring additional steps we can take to improve overall infrastructure stability,” the company said on platform X.

Downdetector, an outage tracking website, aggregated status reports showing that at 11:30 p.m. Eastern Time (11:30 a.m. Beijing Time on Friday), there were more than 18,000 Outlook outage reports in the U.S.; on Friday morning local time, countries in the Asia-Pacific region such as India, Australia, and Japan also recorded multiple Microsoft service interruptions. At its peak, around 1:00 p.m. Eastern Time on Thursday, Outlook outage reports in the U.S. exceeded 130,000. The outage has lasted about 12 hours so far.

In its service health notification, Microsoft said that Microsoft 365 functions relying on Exchange Online and email were affected, while services not dependent on Exchange Online remained operational. Exchange Online is the company's cloud messaging platform for email, calendar, contacts, and task delivery. The company added that, so far, “no malicious activity” has been found to have caused the outage.

Email Systems Impacted

Australia’s Minister for Home Affairs and Cyber Security, Tony Burke, stated that Microsoft believes the incident is not a cyberattack. “They think, in some ways, it’s similar to what we saw in the previous CrowdStrike incident—an update went wrong,” Burke said at a press conference.

“The impact they’re dealing with...is mainly concentrated on the email system,” the minister added. Australia’s intelligence agencies and federal police were among those affected by the outage on Friday. The 2024 CrowdStrike failure was one of the largest-scale internet outages in history, which paralyzed technical systems in hospitals, banks, and airports, highlighting the fragility of global interconnected technology.

The U.S. House of Representatives said the outage affected its users and that its engineers are working with Microsoft to resolve the issue. Japanese Deputy Chief Cabinet Secretary Masanao Ozaki told reporters that the outage is affecting the information systems infrastructure of the Japanese government.

Impact Felt by Enterprises

U.S.-based AI companies OpenAI and Anthropic both reported issues with Microsoft connectors, while Indian airlines IndiGo and Akasa Air said their email support services were affected. The outage also disrupted fund management operations at securities firms, life insurers, and investment companies in Taiwan, China. According to a person familiar with the matter, one such company even canceled a scheduled bond repurchase agreement transaction, though the person declined to name the company.

Josh Gilbert, a market analyst at trading platform eToro, said investors are unlikely to make much of this outage, but repeated disruptions in the long run could damage Microsoft.

“I think investors will take this in stride for now because, in reality, few customers can leave the Microsoft ecosystem overnight,” Gilbert said.

“The bigger concern is, this is not the first 365 outage this year. If reliability starts to appear as a recurring issue, it gives every IT department a reason to think twice before handing over more of their business to a single supplier. Before asking customers to pay more for Copilot, the market wants to see Microsoft prove it can keep its systems running reliably.”

Microsoft had a 365 service outage this January and another last October. Last month, its Azure cloud platform experienced an outage, affecting the entire productivity software suite as well as multiple industries worldwide.

Electric truck maker Workhorse Group was scheduled to release third-quarter results on November 12, but due to global business disruption caused by the Microsoft outage, the release has been postponed to November 16.