Important Changes coming to OneDrive Retention

There are some subtle but potentially highly impactful changes coming to default retention for unlicensed OneDrive accounts you need to know. Classic Microsoft has come out with highly confusing support article so in this blog post I am going to break this down so you understand the implications. TLDR:

• Starting January 27, 2025, unlicensed OneDrive accounts for more than 93 days will either move to the recycle bin and subsequently permanently deleted OR will be archived if they fall under a retention policy
• If archived, access to files will undergo reactivation fees and additional monthly storage cost.
• These changes do not apply to EDU, GCC, or DoD customers.
• The article: Manage unlicensed OneDrive user accounts – SharePoint in Microsoft 365 | Microsoft Learn (opens in new tab)

Understanding Current vs Future State#

• If a user is deleted or taken through the user deletion wizard, their OneDrive data is preserved for 30 days and then moved into a recycle bin where it can be recovered by an admin using PowerShell for up to 93 days.
• Custom retention policies can be set in the SharePoint Admin Center or the Compliance Admin Center
• If a user is unlicensed, their data can be retained indefinitely for OneDrive.

The loophole in not having to pay for storage on data preserved through retention policies or through unlicensed users who are not deleted (i.e. they still exist in your user list) is what Microsoft is trying to solve for with this new motion. Imagine a high churn company who has either a 10 year retention policy or does not delete users upon termination. (i.e. they simply strip their license and disable the account.), or both. This company could have 100 active employees with OneDrive but another 500 disabled accounts with 10TB of OneDrive storage that they technically do not have to pay for today.

User Deletion Wizard:

• Retention Policy Configuration:

Future State:

• Moving forward on January 27, 2025, users who are deleted will follow the same default retention and deletion policies that exist today.
• If there are any retention policies in place beyond the default 30 days, OneDrive accounts from deleted users will be archived after 93 days
• Additionally, any unlicensed accounts will also be archived after 93 days by default regardless if there is a retention policy in place.
• If you wanted to access the files of these archived accounts, it will require an activation fee of $.60/GB and then you pay $.05/GB for ALL archived accounts, NOT just the one you access.
  
  • For example, if an organization has 100 unlicensed OneDrive accounts, each consuming 1 TB for a total of 100 TB, and enforcement occurs between January and March 2025, the 100 unlicensed accounts are automatically archived. If the organization needs to reactivate a specific account in October 2025 and set up billing, they incur the following costs:
    
    • A one-time reactivation fee of $0.60/GB for 1TB, totaling $614.40.
    • A monthly storage fee of $0.05/GB for 100TB, amounting to $5,120/month starting from October 2025.

What happens if I take no action?#

• You are NOT going to automatically be enrolled into paying additional money
• If you have unlicensed OneDrive accounts that are older than 93 days of being unlicensed, they will automatically be archived and no longer be able to be accessed unless you fork up the additional cash to reactivate them and pay the monthly storage cost.
• If you have unlicensed OneDrive accounts older than 93 days of being unlicensed AND they do not have a custom retention policy applied, this data will be automatically moved to the recycle bin for another 93 days and then PERMANTELY DELETED

Understanding Scope#

You can identify unlicensed OneDrive accounts using the SharePoint admin center. The following steps show how to use the SharePoint admin center to generate a report of unlicensed OneDrive accounts:

1. Sign in to the SharePoint admin center with your work or school account.
2. Go to Reports and select User reports.
3. Under OneDrive usage, select Unlicensed users.
4. You can download the report as a CSV file.
5. Starting January 2025, an interactive UI is available. You can select a username to view the details.

What are my options?#

• Do nothing except inform your customers =>As part of your user offboarding process, I think giving access to another user (typically their manager by default) for 30 days is sufficient to grab the data they need out of another OneDrive’s account. This does not include an additional 93 days where admins can still recover from the recycle bin. I get we will still have customers though that insist on longer periods or have compliance obligations to keep the data longer. These customers need to understand the next point.
• Have the client sign a waiver that states they will pay the fees for additional storage => Instead of going back and forth on IF you will ever need to access files beyond the 93 day window, make this black and white. You have no idea what those fees are going to be. (they could be super nominal or could be quite hefty depending on the OneDrive account sizes being archived). Make them opt in or state there will always be a limited retention policy for unlicensed OneDrive accounts.
• Rely on 3rd party backup => if you have 3rd party backup in place (which we all should), you can restore into a SharePoint site at a later time if needed.
• Assign a single OneDrive license to an account => if the identity is not deleted, you could reactivate a single users OneDrive by readding a license to it. The benefit here being that you could reactivate an account without having to turn on the Microsoft 365 backup billing motion which will start charging you for ALL archived data. This would make sense if you would have extremely high monthly storage charges.

I am sure there are other options you can think of here given unique customer scenarios but just wanted to highlight some of the top considerations.

References#

• Manage unlicensed OneDrive user accounts – SharePoint in Microsoft 365 | Microsoft Learn (opens in new tab)
• OneDrive retention and deletion – SharePoint in Microsoft 365 | Microsoft Learn (opens in new tab)
• Set the OneDrive retention for deleted users – SharePoint in Microsoft 365 | Microsoft Learn (opens in new tab)
• FAQ: Manage unlicensed OneDrive user accounts – SharePoint in Microsoft 365 | Microsoft Learn (opens in new tab)