Microsoft OneDrive Policy Changes 2025: Critical Updates IT Admins Need to Know

As of January 27, 2025, Microsoft will implement new policies for managing unlicensed OneDrive for Business accounts. Any OneDrive account unlicensed for more than 90 days will be automatically archived, rendering it inaccessible to end users. Administrators will retain visibility through administrative tools but won't have access to the content without taking actions

Understanding Unlicensed OneDrive Accounts

Unlicensed OneDrive accounts arise when a user’s license is removed—perhaps due to departure from the organization—or when accounts are assigned to licenses that have expired. These accounts can pose security and compliance risks, consume storage resources, and lead to data management challenges.

Key Changes Effective January 2025

• Automatic Archiving: After 90 days without a license, OneDrive accounts will be archived automatically. While admins can see these accounts, neither they nor end users can access the content until reactivation.
• Account Deletion: If an unlicensed account is moved from SharePoint to Microsoft Archive automatically and the organization hasn’t configured Microsoft 365 Archive, Microsoft will permanently delete the account after 180 days.
• Exemptions: Currently, these changes do not apply to education, GCC, or Department of Defense tenants.

Implications for IT Administrators

These policy updates necessitate proactive management of OneDrive accounts to prevent unintended data loss and avoid unnecessary costs.

Recommended Actions

1. Audit Unlicensed Accounts: Utilize the SharePoint admin center to generate reports identifying unlicensed OneDrive accounts. Navigate to Reports > User reports > OneDrive usage > Unlicensed users to access this information.
2. Assign Licenses Promptly: For accounts that need to remain active, assign the appropriate Microsoft 365 or Office 365 licenses before the 90-day period elapses to prevent automatic archiving.
3. Delete Unnecessary Accounts: For users no longer with the organization and whose data isn't subject to retention policies, delete their unlicensed OneDrive accounts to free up storage and reduce potential security risks.
4. Set Up Archive Billing: If retaining data from unlicensed accounts is necessary, configure archive billing to manage storage and reactivation costs effectively. This setup involves linking an Azure subscription in Syntex pay-as-you-go and enabling Microsoft 365 Archive Unlicensed Account billing. Archived accounts will incur storage fees of $0.05 per GB per month. Reactivating an account will cost $0.60 per GB, providing 30 days of access before the account returns to an archived state.
5. Review Retention Policies: Ensure that unlicensed accounts subject to retention policies or legal holds are managed in compliance with organizational and regulatory requirements. Adjust retention settings as needed to align with the new archiving policies.

Wrap-Up: Keeping Your Data Secure and Compliant

The upcoming changes to OneDrive for Business highlight the need for proactive data management and license administration. By auditing unlicensed accounts, assigning licenses promptly, and configuring Microsoft 365 Archive billing, you can avoid unnecessary costs and ensure your organization stays compliant and secure.

Staying informed and implementing best practices will help you navigate these updates with confidence and maintain control over your organization’s data. Let CloudServus help you stay prepared, reach out today for support with Microsoft licensing or any Microsoft project you are working on.