OneDrive Unlicensed User Storage Update: Things to Know and Next Steps

Starting on Jan. 27, 2025, Microsoft will initiate the process of ending OneDrive storage access for all unlicensed users. We advise all organizations to take note of the following information.

Here’s what you need to know:

• This change applies to any OneDrive for Business user without a paid OneDrive license: There are many reasons why a user may be unlicensed, most commonly:
  • As an individual leaves an organization, their user may become unlicensed if the individual’s user profile is not fully deleted.
  • User licenses can be removed by IT admins.
  • A user license can expire if not properly managed.
  • A user may be deleted from Entra ID, but if a retention policy for that user is still in place, all data will remain stored.
• Unlicensed users will have their data archived: User storage will be moved into the organization’s Microsoft 365 Archive after 93 days and will only be accessible if Archive billing is enabled.
  • Microsoft 356 Archive is Microsoft’s storage solution for long-term, low-cost, and compliant retention of inactive data.
• Archive billing applies to all unlicensed users: This means that for an admin to retrieve even one user, they are required to pay for all unlicensed users that are stored within that archive.
  • Some users can be deleted from the Microsoft 365 Archive before storage retrieval, but only if they are not subject to a retention policy. It is also important to note that unlicensed accounts without a retention policy will be moved to the recycle bin automatically within 93 days after this change begins. After this 93-day period, all users without retention policies set will be moved to the recycle bin immediately after becoming unlicensed.
• EDU, GCC, and DoD tenants will not be affected by this change.

With this new storage update for unlicensed users, organizations that want to access their inactive user data will have to do so through Microsoft 365 Archive. If an organization’s Archive billing has not been set-up, that data will remain stored within the platform, but it will remain inaccessible. If an organization has already set up active Archive billing, they will gain immediate access and additional costs will be incurred automatically.

For the storage of unlicensed users, it will cost:

• $0.05 per GB/month to retain data within Microsoft 365 Archive.
• $0.60 per GB to reactivate an account and restore all associated user data.

How Could This Impact Your Organization?

This is an issue for some IT admins, since the OneDrive retention policy has been used to continually access user data after a license is no longer active. Previously, those retention policies allowed for unlicensed files to remain easily accessible within the organization. However, with this new change to OneDrive, that practice will no longer be possible without accessing the paid Archive. If not properly prepared for this change, organizations may temporarily lose access to potentially important files that were created or shared by an unlicensed user. This temporary loss of access could hinder normal business continuity, and the retrieval process will require organizations to face additional costs.

Ultimately, the costs an organization can expect to face as they maneuver this change is dependent on their user retention policies and data management practices.

What’s Next?

At this time, unlicensed user storage has already begun the process of being moved and the rollout will be gradual. Accounts unlicensed prior to Feb. 17 will have all unlicensed users archived by May 16. IT admins will have the option to utilize Microsoft 365 Archive through setting up Archive billing for any affected users, deleting these affected users, or reactivating OneDrive licenses for users.

A full list of your organization’s unlicensed user list is accessible through the SharePoint Admin Center.

Best Practices

Instances like this illustrate the importance of securing and maintaining user data within your organization. As this update proceeds, here are some ways to stay better prepared.

• Implement a robust user management process to ensure proper maintenance and deletion of users where necessary.
• Monitor user retention policies regularly to ensure proper policies dependent on role and compliance guidelines.
• Use a third-party OneDrive for Business backup to maintain access and control of all user data regardless of any changes to the Microsoft 365 service.

It is important to note that this OneDrive for Business update also prevents both native and third-party backup solutions from backing up unlicensed users. To ensure proper data retention and compliance, organizations should be proactive in backing up users before removing their licenses, as recovering this data reactively can be a complex process.

Veeam Data Cloud for Microsoft 365 Covers OneDrive for Business and More!

Veeam Data Cloud for Microsoft 365 provides a full comprehensive backup of OneDrive for Business and other Microsoft 365 apps such as Teams, Exchange Online, and SharePoint Online. Unlicensed user data can be retained and recoverable within any time frame set by the admin.

Veeam Data Cloud’s integration with Microsoft 365 Backup Storage delivers powerful large-scale disaster recovery (DR) capabilities, allowing organizations to recover their entire Microsoft 365 environment quicker than ever before.

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