Get Unlicensed OneDrive Accounts in Microsoft 365

As part of Microsoft’s initiative to auto-archive unlicensed OneDrive accounts, it was announced that starting January 27, 2025, organizations will be charged for unlicensed OneDrive account storage. This change could quickly lead to unnecessary costs. It’s crucial to act now and review unlicensed OneDrive accounts before the charges hit.

In this blog, we’ll walk you through how to find unlicensed OneDrive accounts and manage them to avoid unnecessary fees.

A OneDrive account becomes unlicensed when the user’s license is removed or expires. This can happen when an employee leaves the company, their license is deactivated, or they are no longer assigned a Microsoft 365/Office 365 subscription.

According to Microsoft,

Starting January 2025, organizations will be charged for the storage of unlicensed OneDrive accounts. These changes do not apply to EDU, GCC or DoD customers.

Here are the key updates:

• Storage Charges: Organizations will incur storage charges for unlicensed OneDrive accounts based on the amount of storage used.
• Archiving Policy: Unlicensed accounts will be automatically archived after 93 days of license removal into Microsoft 365 Archive.
• Account Reactivation: Reactivating an archived account will incur a reactivation fee.

Starting January 27, 2025, OneDrive accounts that remain unlicensed for over 93 days will be either moved to the recycle bin for permanent deletion or archived if under a Microsoft 365 retention policy. Once archived, these accounts cannot utilize unused SharePoint storage, even if Microsoft 365 Archive is configured within the tenant. Archived unlicensed OneDrive accounts will be billed for the full amount of consumed storage.

Here is a simple flowchart to make you understand the policy better:

⚠️Important: If no action is taken, unlicensed OneDrive accounts will be automatically archived starting January 2025, and this will incur archiving charges.

For example, if an account becomes unlicensed on August 1, 2025, it will be archived by November 2, 2025. However, without a retention policy or manual intervention, the account and their data will be permanently deleted after the 93-day period.

1. Admins should manage unlicensed accounts before January 2025 to avoid unexpected storage costs or deleted files. Starting January 2025, the storage cost of unlicensed accounts will be charged to the billing information specified in M365 Archive if you opt into billing for unlicensed accounts.
2. If you don’t opt in, these accounts may be deleted after 180 days of being unlicensed. This article will guide you on how to generate a report of all unlicensed OneDrive accounts using the SharePoint admin center.

Once billing is enabled, archived unlicensed OneDrive accounts will incur charges:

• Reactivation Fee: $0.60 per GB per month
• Storage Fee: $0.05 per GB per month

For example, reactivating 1TB of archived accounts will cost $614.40/month in reactivation fees. Paying a monthly fee to store archived data in Microsoft 365 Archive for 100TB of archived accounts would be $5,120/month.

While these accounts may seem harmless, they can:

• Increase Costs: The new storage charges for unlicensed accounts can significantly increase IT expenses.
• Pose Security Risks: Unmanaged accounts can become security vulnerabilities, potentially holding sensitive data outside organizational control.
• Complicate Compliance: Unlicensed accounts may bypass data governance and retention policies.

Now let’s check how to generate a report of all unlicensed OneDrive accounts using the SharePoint admin center.

Follow these steps to get unlicensed OneDrive accounts report from the SharePoint admin center:

1. Go to the SharePoint admin center.
2. Navigate to Reports -> OneDrive accounts.

This page shows the weekly unlicensed OneDrive accounts report in your organization.

The terms in the OneDrive accounts report page refer to the following:

• Retention Period: This refers to the duration that unlicensed accounts are kept in an archived state after a license is removed or a user is deleted, before they are permanently deleted.
• Retention Policy: A policy set in Microsoft Purview that ensures unlicensed accounts are retained in an archived state until the policy’s expiration date, after which they may be deleted.
• Active User with No License: These are accounts that no longer have a license but are still active. Starting January 2025, these accounts will be deleted instead of archived.
• Duplicate Accounts: Accounts that may be unnecessary, typically created during employee transfers. These accounts can be identified and deleted using the CSV report, as they will incur charges when archived starting January 2025.

Downloading the Unlicensed OneDrive Accounts Report:

3. Use the Download report option to download the unlicensed OneDrive accounts report into a csv format.

The downloaded OneDrive unlicensed users report will include essential information such as the,

• Url – The web address of the unlicensed OneDrive accou
• Owner email – The email address of the account’s owner.
• Storage used – Displays the consumed storage of the unlicensed OneDrive accounts.
• Unlicensed due to – Shows the reason why the account became unlicensed.
• Deletion blocked by – Identifies any retention policies or actions preventing account deletion.
• Unlicensed on – The date when the account became unlicensed.
• Deletion scheduled on – The date when the account is scheduled for deletion.

Note: In cases where duplicate accounts are created—such as when employees switch roles or locations—admins can use this OneDrive report to identify and remove those duplicates.

Once you’ve identified unlicensed OneDrive for Business accounts, you can either assign a license or delete the account.

To give an unlicensed OneDrive account access, you need to assign a Microsoft 365 or Office 365 subscription that includes OneDrive. This allows the user to use their OneDrive files and manage settings.

To assign licenses to users,

Navigate to the M365 admin center -> Users -> Active users -> Select the unlicensed user -> Manage product licenses -> Assign a license -> Save changes.

You can remove the Microsoft 365 user from your organization before automatic archival. The OneDrive account and its files will be moved to the recycle bin, where they will be permanently deleted after 93 days.

To delete the user account,

Navigate to the M365 admin center -> Users -> Active users -> Select the unlicensed user -> Delete user.

After archival: You can delete the account directly from the archived state without reactivating it.

What happens to OneDrive data when a license is removed?

When a license is removed, the OneDrive account becomes unlicensed and will be archived after 93 days of inactivity as mentioned earlier.

• Archived OneDrive accounts continue to follow the organization’s retention policies, settings, and litigation holds.

-> For example, a five-year retention policy will still apply to the archived account, and archiving doesn’t reset the retention period or hold.

• While an archived account can be deleted, if the account is under retention policy, it cannot be deleted, and the admin will see an error message.

• If the archived account has an associated user, IT admins can assign a valid license, and the account will automatically reactivate within 24 hours. If no user is associated, it’s recommended to move any necessary content to a SharePoint site or an active OneDrive account.

📝 Important Points to Note:

• To access data from an unlicensed OneDrive account, you need to set up Microsoft 365 Archive by linking an Azure subscription in Syntex pay-as-you-go.

• Archived content remains discoverable in Microsoft Purview eDiscovery, and you can export search results without needing to reactivate OneDrive accounts by paying to Microsoft.

• Once an unlicensed account is reactivated, it becomes accessible within 24 hours. The account stays active for 30 days before being archived again.

• Changes to retention policies will sync with archived accounts, meaning if the retention period is reduced, the new policy applies, and the recycle bin process begins for those accounts.

We hope this blog has helped you get ready for the upcoming OneDrive unlicensed accounts storage policy changes. Thanks for reading. Feel free to share your questions in the comments below.