Starting next year, you will have to pay for unlicensed OneDrive accounts

Key findings

Unlicensed OneDrive accounts are automatically archived after 90 days, with monthly storage fees applicable.
Accounts can be reactivated for a fee of $0.60 per GB.
Organizations have three options for unlicensed accounts: reactivate, delete, or archive for a fee.

Organizations that use OneDrive for work or school will need to pay more attention to their unlicensed accounts thanks to new policies that will take effect starting January 27th next year (via Petri). Any user account that remains unlicensed for more than 90 days will be automatically archived by Microsoft, incurring a monthly storage fee of $0.05 per GB. In this state, the data will be inaccessible to administrators or end users until the organization enables unlicensed account billing and pays a fee of $0.60 per GB to re-enable it. If storage fees are stopped, the account will be deleted within 93 days.

Why is Microsoft making this change?

Microsoft cites security as the reason for this new policy, saying that unlicensed OneDrive accounts “can pose security and compliance risks, as well as cause confusion and duplication of files.” An unlicensed account is any account that is not linked to a Microsoft 365 or Office 365 subscription. This can happen if the license expires, is not activated, or is not assigned. For example, when a student who uses OneDrive for school graduates, their license expires and their account becomes unlicensed.

At this point, the organization should delete the account, but sometimes this does not happen, potentially creating the security risks Microsoft has identified. These new policies encourage organizations to stay on top of account management to avoid automatic archiving and the associated storage costs – with the exception of Education, GCC, and DoD customers, who are not subject to these changes.

After January 27, any account that loses its license will have 90 days before it is archived. However, for any account that lost its license before October 26, 2024, archiving can occur any time between the end of January and the end of March 2025. This means that users will have to sort out their unlicensed accounts between now and January, and Microsoft recommends checking SharePoint Admin Center > Reports > OneDrive Accountswhere a list of unlicensed accounts will be available from August 16, 2024.

A screenshot showing Microsoft's policy change for unlicensed OneDrive accounts

There is a grace period for archived accounts. As long as the organization reactivates the account within seven days, it will not be charged the $0.60 per GB reactivation fee. Once an account has been archived, it is also possible to delete it without having to reactivate it first, provided the account does not have a retention policy in place. If the organization wants to keep the account and is willing to pay the storage fee, it is also perfectly acceptable to keep it archived for a long period of time.

Overall, this means that organizations now have three options when it comes to unlicensed accounts: they can reactivate and relicense them, delete them, or pay to archive them. While this can easily be viewed as “just another fee,” it should be noted that for some customers, this could also be a good deal. If an organization has data it needs to keep but doesn’t use very often, Microsoft 365 Archive offers a much cheaper option than paying to maintain an active license, as the table below shows.