How to Control the Creation of Microsoft 365 Groups with the Microsoft Graph PowerShell SDK

Control Group Creation to Avoid Group Sprawl

Microsoft’s documentation covering the topic of “Manage who can create Microsoft 365 Groups” begins with: “By default, all users can create Microsoft 365 groups. This is the recommended approach because it allows users to start collaborating without requiring assistance from IT.”

I can’t say how strongly I disagree with this perspective. All it does is result in group sprawl, or more likely, teams sprawl. We learned the lesson with Exchange Server public folders in 1996 when users created new folders with abandon. Organizations are still clearing up the mess today, which is one of the reasons for the persistence of public folders in Exchange Online. The same need will arise to clean up unused and unwanted teams if organizations follow Microsoft’s advice to allow group creation by any and all. Microsoft promised to develop functionality to help with group sprawl in 2021. So far, there’s little sign of progress in this space, unless you include the ownerless group policy (2022) and the group expiration policy (available since 2020).

Group Creation Using the Microsoft Graph PowerShell SDK

The Microsoft documentation explains how to restrict group creation by running PowerShell to configure the Entra ID groups policy. Unhappily, the current version of the documentation uses cmdlets from the Azure AD Preview module, which is due for deprecation in March 2024, The same work can be done using cmdlets from the Microsoft Graph PowerShell SDK, which is what I cover here.

The basic approach is:

• Create a security group to control group creation. The members of this group will be allowed to create new Microsoft 365 groups via user applications like Outlook and Teams. Accounts holding roles like Global administrator, Teams service administrator, Groups administrator, SharePoint administrator, User administrator, and Exchange administrator can always use administrative interfaces like PowerShell or the Microsoft 365 admin center to create new groups. The members of this group need Entra ID Premium P1 licenses.
• Update the Entra ID groups policy to block group creation by anyone except the members of the security group.

I have no idea why Microsoft doesn’t make control over Microsoft 365 group creation available through an option in the Microsoft 365 admin center. My cynical side says that this is because they don’t want tenants to control group creation, so they force administrators to use PowerShell.

Create a Security Group to Control Group Creation

A simple security group is sufficient to define the set of accounts allowed to create new Microsoft 365 groups (Figure 1). You can either create a new group or use an existing group. Creating a new group is probably best because you can give the group an appropriate name and description and be sure that the group will only be used to control group creation.

Create a Groups Policy Object

Microsoft 365 uses a directory setting object to hold the settings to control creation and other aspects of Microsoft 365 groups. By default, tenants use default settings. To change these settings, you must create a copy of the template directory settings object and modify it. Here’s how to create a new directory settings object by retrieving the identifier of the default object and creating a new object for the tenant:

Connect-MgGraph -Scopes Directory.ReadWrite.All
$PolicyId = (Get-MgBetaDirectorySettingTemplate | Where-Object {$_.DisplayName -eq "Group.Unified"}).Id 
New-MgBetaDirectorySetting -TemplateId $PolicyId

The New-MgBetaDirectorySetting cmdlet fails if a tenant-specific directory settings object already exists.

Updating the Groups Policy to Limit Creation

With a groups policy object in place, we can update the settings. You can see the default settings by running:

Get-MgBetaDirectorySetting | Where-Object {$_.DisplayName -eq "Group.Unified"} | ForEach Values

To control group creation, two settings are updated:

• EnableGroupCreation: This setting controls if users can create new groups. The default is true. We update it to false.
• GroupCreationAllowedGroupId: This setting holds the identifier for the group whose members are allowed to create new groups.

The setting names are case-sensitive and should be passed exactly as shown.

To update the settings, fetch the identifier for the group (or have it available). Then populate an array with the current settings before updating the two settings described above. Finally, update the directory settings object with the new policy settings. Here’s the code:

$GroupId = (Get-MgGroup -Filter "displayName eq 'GroupCreationEnabled'").Id
$TenantSettings = Get-MgBetaDirectorySetting | Where-Object {$_.DisplayName -eq "Group.Unified"}
[array]$Values = $TenantSettings.Values
($Values | Where-Object Name -eq 'EnableGroupCreation').Value = "false"
($Values | Where-Object Name -eq 'GroupCreationAllowedGroupId').Value = $GroupId
Update-MgBetaDirectorySetting -DirectorySettingId $TenantSettings.Id -Values $Values

Figure 2 shows these commands being run.

Updating the group policy settings (for instance, to switch the group defining who can create new groups) uses the same approach: find values, update values, update the directory setting object.

If you make a mess of the Groups policy, you can start over by removing the directory settings object and creating a new policy. Here’s how to remove the policy:

$PolicyId = (Get-MgBetaDirectorySetting | Where-Object {$_.DisplayName -eq "Group.Unified"}).Id
Remove-MgBetaDirectorySetting -DirectorySettingId $PolicyId

Keeping Groups Under Control

Even if you decide to limit group creation, it’s a good idea to keep a close eye on what groups and teams are in active use and trim (or archive) those that don’t meet usage thresholds. The Teams and Groups activity report script can help with this process. Another point to consider is that Teams doesn’t come with any form of directory to allow users check if a team already exists for a topic. It’s possible to create such a directory, but making people check the list is a different challenge.

Another example of using directory objects to control groups is to block guest access for individual groups and teams. You can do this with sensitivity labels or by updating the directory setting for individual Microsoft 365 groups with PowerShell.

---