How Microsoft outage shows risk of tech monopolies: ‘We were just helpless’

Many businesses and consumers were unable to communicate through digital channels as a global outage of some Microsoft services left people scrambling, and experts say this event further highlights the need for Canada to adopt more sovereign digital tech.

“The fact that Canada basically closed for business because one U.S. company had a glitch on some servers shows how dependent we are, how vulnerable we are,” says Joshua Pearce, who holds the Thompson Chair of Innovation at Western University.

“This is one way the entire economy is now rolled up in these technological services […] if we want to be able to stand on our own two feet, we need to be using our own open source operating systems, be more reliant on open-source software that we have some control over instead of only relying on foreign companies.”

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On Thursday, the outage hit a wide range of Microsoft 365 offerings that interact with its Exchange Online and email services.

Services including Outlook, Teams and AI assistant Copilot were reported by users to be down. As of publication, Microsoft said most services had been restored but fixes were still ongoing and there was no timeline for full restoration as of 3:00 p.m. Friday.

“How the MS outage is affecting [financial] markets isn’t clear, but there is little else to consider by way of influences anyway on this Friday the 13th. It’s not all bad either, as spam is non-existent, though it’s a reminder of the perils associated with tech dominance given widespread reliance on Outlook, Teams, Edge, Co-Pilot, Excel, Powerpoint etc,” said Scotiabank vice president and head of Capital Markets Economics in a note to clients on Friday.

The full extent of the fallout from the outage is unclear, but regions spanning North America to the Asia Pacific were included in Microsoft’s updates, and the company reported its 365 suite of services had nearly half a billion paid subscriptions as of January.

“I was just shocked how much white collar work depends on the single Microsoft product, and when it’s down, really lots of people weren’t able to do their jobs,” says Emily Osborne, a policy research associate at the Canadian Shield Institute.

“There was nothing we could do to sort of address the outage as it was happening — we were just helpless to Microsoft’s control,” she added.

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“We depend on so few providers, and when the services of one of them stops working that has a huge impact on our economy.”

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Even the federal government said they were impacted by the outage, according to a statement in response to a Global News request Friday.

“The Government of Canada experienced impacts from the Microsoft service outage. Ensuring government digital services are secure, reliable and resilient is a priority, and we continually assess our systems and dependencies with that objective in mind,” said AI and Digital Innovation Minister Evan Solomon in a statement.

Diversifying reliance on different providers and expanding beyond some of the big American names can give businesses and consumers more options when a problem arises, experts say.

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Osborne says having more sovereign digital providers is something that Canada could work on.

“There’s also certainly a role for the government to play. We’ve seen lots of governments in the EU making the very active and strategic choice to move away from products delivered by American firms. So that’s certainly something that Canada could consider doing to increase our resilience,” says Osborne.

“It would be hard to switch everything all at once, but there’s certainly an argument to be made for starting somewhere small with some sort of government communication platform that is a sovereign alternative — a privacy-preserving alternative to Microsoft products.”

Global News sent a request for comment to Shared Services Canada (SSC), the federal government’s IT provider, asking if a form of sovereign digital communications software is being developed or considered for use. A SSC spokesperson acknowledged the request, but did not provide a response by publication.

In the EU, a service known as Euro-Office is a suite of cloud-based digital sovereignty initiatives launched this year to serve as an alternative to American platforms like Microsoft 365.

“This is the actual data sovereignty or digital sovereignty we need to talk about is the physical infrastructure and the software that we use,” says Evan Light, associate professor at the faculty of information at the University of Toronto.

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“It’s an open source office suite that does everything Microsoft Office does, but it’s developed by the European Union. It’s open source, it’s free, and it’s meant to be a project to sort of decouple the European Union from these tight, vulnerable things to American software.”

Light says these systems can be tailored and scaled to individual organizations, which can help limit the impact of an outage.

“So I could run a server here at U of T for my faculty, and if we need to reboot that thing, we’d reboot that thing and it affects a hundred people rather than millions.”

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Experts says businesses and consumers should also have backup plans for technology failures, including maintaining alternative communications services to help limit disruptions.

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“Thinking in terms of multi-homing and then having sort of multimodal forms of communication at your disposal rather than just getting into the habit of using one service all the time over and over and over again,” says Brett Caraway, associate professor of media economics at the University of Toronto.

“Institutions, I think, need to think more carefully about what they would do if they lost something. You’ve got to game that out.”

“There’s a lot of convenience and a lot efficiency that comes out of having a centralized coordination system, but it also exposes you to a great deal of risk.”