Note: This change is only impactful for organizations with on premises servers. Customers who currently store files on web servers that use Basic authentication can move those files to SharePoint Online, OneDrive for Business, or SharePoint Server on-premises as a solution. However, files stored on SharePoint Online, OneDrive for Business are not affected. Access to files stored on SharePoint on-premises server that are using basic authentication will be blocked.More information is here – Microsoft SMB Protocol Authentication – Win32 apps | Microsoft Learn. The underlying authentication layer for file share is NTLM, and there is not change to NTLM. Windows files share access is not affected.Please see Exchange Online – September 2022 Update. There is a separate effort to retire Outlook connecting to Exchange Online using Basic Authentication.Customers using basic authentication to connect to Exchange on-premises/Exchange Online can continue to use basic authentication without any changes to Exchange. This retirement will not affect Exchange Online and Exchange on-premises.

Instead, it recommends moving to a more secure authentication method, preferably Modern Authentication, and enabling multi-factor authentication based on OAuth2.0 token-based auth. Microsoft will retire this feature in Office Apps version 2209+. Continued use of Basic Authentication is a big security concern, so Microsoft has decided to deprecate it from all tenants. As a result, an attacker can access these credentials and use them to access resources. Microsoft is making this change because basic authentication is a legacy authentication method that sends a username and password with each request. Microsoft 365 Apps are disabling server sign-in prompts using Basic authentication in Office Apps. MC454810 – Updated March 3, 2023: Microsoft has updated rollout timeline below.

Office 365 legacy authentication