Understand Why Unlicensed OneDrive Accounts Exist

At the end of July, I reported Microsoft’s plan to charge for unlicensed OneDrive for Business accounts. The idea is simple. Ninety days after a OneDrive for Business account enters an unlicensed state, SharePoint Online will move the account into Microsoft 365 Archive. The tenant must then decide what to do with the accounts with the options being to manage the accounts or leave accounts to rot in the archive. Unlicensed accounts arise when an account no longer has access to a service plan for OneDrive (see the product names and service plans reference). Usually, an account enters the unlicensed state for OneDrive when an administrator deletes an account or removes a license like Office 365 E3 or E5 from the account.

Managing accounts requires the tenant to link Microsoft 365 Archive to an Azure subscription to pay for ongoing storage and restore operations. Storage costs $0.05 per month per gigabyte while retrieval costs $0.60 per gigabyte. Restored accounts remain accessible for 30 days. During this time, someone has to review the material in the account and move it to another repository, such as a different OneDrive for Business account or a SharePoint Online site. Once the 30-day period lapses, SharePoint Online archives the account again.

The OneDrive Report

So good, so far. Archiving old OneDrive accounts that clutter up storage is a good idea. It stops artificial intelligence tools like Copilot for Microsoft 365 using the content held in the obsolete accounts in its response to users and helps to better manage information belonging to ex-employees.

When Microsoft issued MC836942 on July 26, they said that by August 16, 2024, SharePoint administrators would be able to access a new report detailing unlicensed OneDrive for Business accounts. The OneDrive report should now be available through the Reports section of the SharePoint admin center in all tenants (Figure 1).

Note the warning that if accounts are left in Microsoft 365 Archive for more than 180 days after becoming unlicensed and the tenant does not take out an Azure subscription to pay for the Microsoft 365 Archive storage costs, SharePoint Online can delete the accounts. No documentation is currently available to cover this point, but it seems reasonable that Microsoft should remove old and unwanted OneDrive accounts if the owning tenant is unwilling to pay the storage costs to keep them in the archive.

Four Categories of Unlicensed OneDrive Accounts

Unlicensed OneDrive accounts fall into four categories:

• Retention period: The owning account is unlicensed but SharePoint Online has retained the OneDrive account because the retention period configured in the SharePoint admin center has not expired.
• Retention policy: A Microsoft 365 retention policy or retention labels prevent the deletion of an unlicensed OneDrive account. It is quite common for tenants to apply a blanket retention policy to all SharePoint Online sites and OneDrive accounts to retain information for multiple years. If this happens, the unlicensed OneDrive accounts cannot be removed until the retention period defined by the policy lapses.
• Active user with no license: The account that owns the OneDrive account is still active (is not deleted), but no longer has access to a service plan for OneDrive.
• Duplicate accounts: The account that owns the OneDrive account has several OneDrive accounts. This used to happen more often several years ago when account provisioning was not as good as it is now. I have not seen a duplicate account created in the recent past.

Figure 1 shows that my tenant has 34 unlicensed OneDrive accounts held by a retention policy. This is expected because I use a broad retention policy to govern removal of material from SharePoint Online and OneDrive for Business. Currently, you cannot see details of the accounts within each of the four categories on-screen. Instead, you must download the CSV file containing the details. In their documentation, Microsoft promises that an interactive UI will be available from January 2025, saying that “You can select a username to view the details.” Presumably, this means that the various sections in the on-screen report will expand to show usernames, and you can then expand a username to see its details, such as those available in the CSV file (Figure 2).

Time to Review Unlicensed OneDrive Account Information

Now that information about unlicensed OneDrive accounts is available in the SharePoint admin center, tenant administrators should check the report and review its content to determine if anything unexpected is present. I don’t imagine that anything strange will turn up, but you never know. Following the review, administrators might decide to adjust retention periods and policies to allow the removal of OneDrive accounts belonging to deleted Entra ID accounts or prepare for long-term storage in Microsoft 365 Archive.

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Microsoft 365 Archive Takes On Unlicensed OneDrive Sites

What are we to make of the announcement in message center notification MC836942 (26 July 2024) that Microsoft plans to charge for storing unlicensed OneDrive for Business sites through Microsoft 365 Archive?

Slipped into the newsfeed late on a Friday afternoon (the recommended way to share bad news), Microsoft’s announcement is both unexpected and entirely predictable. It’s unexpected because Microsoft hadn’t communicated their intention of doing this during high-profile conference keynotes (perhaps because of the bad news element). It’s predictable because Microsoft hadn’t the tool to handle unlicensed OneDrive sites until Microsoft 365 Archive (Figure 1) came along. Archiving unlicensed sites makes a ton of sense.

An unlicensed OneDrive site can exist for several reasons. The most common is that the site comes within the scope of a retention policy (or items within the site have retention labels). In this situation, OneDrive must retain the sites even after the retention period configured for deleted OneDrive accounts (by default 30 days) elapses. It’s also possible that the owner’s account no longer has a OneDrive license.

The simplest reading for this story is that Microsoft wants organizations to clean up (remove) unlicensed OneDrive sites. It could also be a step to help organizations manage the removal of OneDrive sites belonging to ex-employees better. These reasons are valid, but as often the case with Microsoft, some other influences might also contribute to the decision.

Helping Copilot for Microsoft 365

Copilot for Microsoft 365 might be another factor in this story. By their very nature, unlicensed OneDrive sites are unmanaged and prone to contain obsolete and unwanted information. Keeping the obsolete sites online and available for Copilot to access increases the chances that Copilot will reuse some of the material contained in the sites in its responses to user prompts. That’s obviously a bad thing.

As I noted on May 20, archiving obsolete material can help organizations deal with the digital debris found in obsolete SharePoint Online sites. The same applies to obsolete OneDrive sites.

Payment for Archived OneDrive Sites

Like SharePoint Online sites managed by Microsoft 365 Archive, Microsoft will charge to archive unlicensed OneDrive sites. The charge is minimal ($0.05/GB per month) with a $0.60/GB fee to reactivate an archived site. Like other Microsoft 365 Archive operations, payments must be made through an Azure subscription.

The interesting thing is that reactivation lasts 30 days after which the site becomes archived again. It seems like this is a strong hint for someone to use the time to extract any required information from the reactivated OneDrive site before removing the account.

One thing that’s unclear is what happens if you don’t set up an Azure subscription. From the text, it seems like OneDrive will automatically move the unlicensed sites into Microsoft 365 Archive and the sites will remain there in an inaccessible (can’t be reactivated) state until the organization creates an Azure subscription and links the subscription to Microsoft 365 Archive. However, even when an Azure subscription is not present, archived sites remain indexed and available to Purview compliance solutions like eDiscovery, so administrators can still run content searches to find and export content from the archived sites.

I don’t think archiving unlicensed OneDrive sites will be a huge revenue generator for Microsoft. But what it might do is bring Microsoft 365 Archive to the attention of organizations that have not used it before who might then start to use the product to archive obsolete SharePoint Online sites. The big attraction here is that moving SharePoint Online sites to Microsoft 365 Archive frees up expensive SharePoint storage.

Next Steps

To help tenant administrators understand how many unlicensed OneDrive sites are present, Microsoft plans to introduce a new report for OneDrive in the SharePoint Online admin center. The new report should be available in all tenants worldwide by August 16, 2024. The report notes why OneDrive accounts are unlicensed. Tenant administrators can’t do much about sites required for retention, but they can remove the other sites.

January 27, 2025, marks the point when Microsoft moves unlicensed OneDrive sites into Microsoft 365 Archive and Azure subscriptions are required to reactivate sites. The six-month period before automatic archiving of OneDrive sites in an unlicensed state for 90 days begins should be enough time to discuss and decide how to accommodate this new aspect of OneDrive management.

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