The Microsoft outage could be a disaster for the Australian economy that forces some small businesses to close, with costs expected to run into the billions of dollars, experts have warned.
The US software company has said it is "deeply sorry" for a widespread outage that caused disruption to millions of users, organisations and businesses across the globe – and that it has "addressed the underlying issue".
The company said the outage was a "technical issue" not related to cyber-attacks or AI agents, and that it continued to gradually restore services.
Experts have said the outage exposes "Australia's reliance on foreign technology" and that people unable to be paid, send an invoice, or access government services "are entitled to be worried".
The outage of Microsoft's services, which began on Friday morning, lasted roughly 18 hours before services started to recover. Microsoft said it was bringing back services gradually to ensure a stable restoration.
Ashwin Pal, a partner at the risk advisory firm RSM Australia, said his clients had activated business continuity and disaster recovery plans, but many businesses didn't have a fallback.
"A protracted event like this can easily be the straw that breaks the camel's back for smaller entities," Pal said.
Pal said Microsoft had obviously struggled to recover, which raised bigger questions.
"I'm a technologist and I'm actually flabbergasted as to how something like this could have happened … they pushed out a change which should have been tested," Pal said.
The Australian Computer Society has renewed calls for the federal government to urgently review which critical IT systems rely on a single provider, and where backup options could keep the economy running.
The society's chief executive, Prins Ralston, said the outage had "exposed Australia's reliance on foreign technology", particularly on small businesses.
"Australians who couldn't get paid, couldn't send an invoice, or couldn't reach a government service this morning are entitled to be worried," Ralston said.
Australian hospitals and health clinics were affected by the outage, although the Australian Medical Association (AMA) on Friday said had been no impacts for patient care.
"We've had some facilities return to using paper for scripts because authentication to get into lots of prescribing software requires multifactor verification, which requires you to be able to access your Microsoft-supported email," said the AMA's president, Dr Michael Bonning.
Courts in South Australia and Victoria reported that the outage had affeced its email system. Many schools across the country were also affected.
Service NSW, the one-stop shop agency for residents, drivers, and business owners to access government services, encouraged customers to delay their visits to its service centres.
Federal government departments have also been maffectedy the outage, including national security agencies.
The head the domestic spy agency Asio, Mike Burgess, on Friday said the organisation's systems "operate on multiple levels", adding that they had been affected "on one level, yes, but not completely".
The outage has affected businesses and organisations across the world that use Microsoft products.
In the UK, healthcare systems were disrupted and several British police forces urged people not to try to report crimes online and to phone them in instead.
US government offices across the country have been affected by the outage, including congressional offices that heavily rely on Outlook email. The US House's chief administrative officer that handles IT for the chamber sent out a "campus-wide alert" to staffers on Thursday about the outage, Politico reported.
In Japan, the shipping company Sagawa Express said it was unable to accept online reservations for some of its services at airports and train stations while Taisho, a leading pharmaceutical company, said it was having to handle orders by phone.
When stock market trading opened on Wall Street, shares in Microsoft dipped slightly, down 1.1% at $516.86.
Microsoft has suggested the outage may have been caused by problems with the settings applied to servers responsible for keeping Microsoft 365 up and running.
Microsoft's executive vice-president of Copilot, Charles Lamanna, said: "We regret that today's outages caused disruptions for our customers, and we are working to address the issue."
