The iCalendar feed does not handle daylight savings time correctly. During the non-DST portion of the year events come through as offset by an hour. This causes all-day events to span two days from 11pm-11pm.

It does not seem to be a limitation of Exchange, as Google iCal files do not have the same issue.

Attached is a screenshot showing how this ends up represented in Outlook for Mac. (It's the same issue in Exchange web view, though, so it's not an Outlook issue specifically.) In the screenshot, "eBay Holiday" is coming from a Google iCal, showing correctly as midnight to midnight. The blurred purple entry is a native Exchange calendar entry.