The Latest Changes to OneDrive and Microsoft 365

Important Updates to OneDrive Retention Policies in 2025

Microsoft has introduced important modifications to OneDrive alongside Microsoft 365 services. The new OneDrive retention policies in Microsoft 365 officially changed in 2025, and they directly affect how inactive accounts and unlicensed users are managed.

Microsoft established a new OneDrive account retention policy which began on January 27, 2025, for inactive accounts.

The short version? Your business needs to take action within 93 days after an employee leaves and their OneDrive license becomes invalid. The account will either be archived with ongoing fees or permanently deleted after this period.

Organizations need to create particular procedures for dealing with inactive accounts and cloud storage management.

Why Microsoft Introduced These Changes?

The Unlicensed OneDrive accounts stayed inactive until an administrator performed the deletion process. The new system aims to improve security measures while reducing risks from unattended accounts and promoting better data handling practices.

The reality is:

• If retention policies exist, the account is archived. The data is still recoverable, but Microsoft 365 applies monthly storage charges, plus additional fees when you need to access it.
• If no policies are applied, files go to the recycle bin for 93 days before being permanently deleted.

The changes will have major impacts on organizations that have 100 employees or more. The absence of preparation exposes your OneDrive data to potential loss while requiring you to spend extra money on data recovery services.

What This Means for Your Business?

The unexpected exit of an employee now results in the loss of essential organizational files. Once their OneDrive for Business account is disabled, all files will vanish within three months unless retention policies are in place.

These new changes apply to organisations of all sizes. Large enterprises managing 500 disabled accounts with 10TB of files could face especially heavy costs or data loss.

Unconfigured retention settings will result in permanent file loss and added expenses for retrieval later.

What Happens If You Do Nothing?

• You won’t be automatically enrolled in paid storage.
• Unlicensed accounts will become inaccessible after 93 days unless archived.
• The system permanently removes accounts when retention is not enabled.
• The retention process moves accounts to an archive state, but users need to pay for storage costs and retrieval fees.

You may not see an immediate bill, but unexpected expenses can appear when you need files urgently.

What Are Your Options?

1. Ignore It

If your company doesn’t use OneDrive cloud storage, you don’t need to take action. Microsoft will delete inactive accounts automatically.

2. Save Files Manually

With admin permission, an unlicensed OneDrive account can be accessed for 90 days to download specific files. The account data exists in the system for this period before it gets either archived with fees or permanently deleted.

3. Apply Retention Policies in Microsoft 365

You can configure retention in the Microsoft 365 admin portal or SharePoint admin center. This allows you to archive data instead of deleting it. But keep in mind:

• Archived files are not actively usable.
• Storage costs apply for every month the data is archived.
• The restoration of files requires additional fees to be paid by the user.

4. Use a Backup Solution (Recommended)

At Insight IT, we recommend SaaS backup for OneDrive. This means:

• The backup process for licensed OneDrive accounts operates on a scheduled basis with a particular time period for data retention.
• We can restore employee files after their account becomes unlicensed even when they leave the company.
• The system requires active user subscription fees as the only payment but does not charge any extra fees for archived data.

The approach enables easy management of files that exist in SharePoint document libraries and Microsoft Teams and other Microsoft 365 applications.

New Features and Improvements in OneDrive

The OneDrive sync app has also received new features and performance improvements:

• Better sync across Windows and macOS.
• Coloured folders in Windows File Explorer and File Explorer for easier organisation.
• Stronger security updates for VDI environments.
• The system requires a reliable alert system to notify users when storage usage reaches its quota limits.
• The system allows users to save email attachments directly into OneDrive cloud storage.
• Updates to file opening and local file management for an improved experience.

These updates will begin rolling out in January 2025.

Additional Resources

If you’d like to dig deeper:

• Visit Microsoft Learn for official tutorials.
• Review Microsoft’s release notes for the latest updates.
• Users can participate in the OneDrive Tech Community to share feedback and acquire knowledge from other users.
• Contact Microsoft support or technical support if needed.
• Explore the SharePoint admin centre for more retention management options.

Not Sure How the New OneDrive Policies Affect You? Let’s Talk

These changes to Microsoft OneDrive mean businesses must plan ahead. The administrators who manage unlicensed OneDrive accounts and business leaders who want to avoid unexpected costs should take immediate action.

The team at Insight IT assists organizations with retention policy setup and OneDrive backup solution deployment and security management. Contact us today to protect your data and simplify compliance.

FAQs

Can we transfer files before deletion?

Yes. The first 93 days allow administrators to move files between OneDrive accounts and SharePoint document libraries.

Does Microsoft notify us first?

Yes. The 365 admin receives a notification before any data is archived or deleted.

Are archived files searchable?

No. Archived data is hidden from users. Through the SharePoint admin centre administrators have the ability to restore archived files.

How can we check inactive accounts?

The Microsoft 365 admin console shows which are licensed OneDrive accounts and which are unlicensed.

Do retention policies apply to SharePoint or Teams?

Yes. SharePoint document libraries, Microsoft Teams, and OneDrive data can all be managed with the same retention rules.