Microsoft 365 Alert – Service Degradation – Microsoft 365 suite – Users may be unable to share files with external recipients through SharePoint Online and OneDrive – ONGOING

28/07/2026 09:27:00 AM

NHS.net Connect Reference: INC46892210

Microsoft Reference: MO1440526

Issue Status: ONGOING

Issue Description: Users may be unable to share files with external recipients through SharePoint Online and OneDrive.

More info: Affected users may be unable to send external sharing invitations from SharePoint Online sites and OneDrive locations, despite external sharing being enabled at both the tenant and site levels.

Current Update: 03/08/2026 08:25:00AM – Microsoft has identified that this impact only occurs in a specific scenario: if your organization previously contacted Microsoft at some point in the past to specifically request that Microsoft turn off Unlicensed User Access for their organization. Otherwise, no impact is occurring. Furthermore, the reason why this was previously working, and is now not working, is they have identified that an unlicensed user check exists in the external sharing code that was previously not enforced, as one-time password (OTP) generation essentially rendered it unnecessary. However, with the recent deprecation of OTP, this check is now being enforced. They have identified two mitigations impacted organizations can take to relieve the issue:

Scope of impact: Some users attempting to share files with external recipients through SharePoint Online and OneDrive may be impacted. This information may be updated as our investigation continues.

Root cause: Organisations that requested we turn off Unlicensed User Access for their organization are encountering this problem after OTP deprecation and unlicensed user check in the external sharing code is now being enforced.

Next update by: Wednesday, August 5, 2026, at 10:30 PM UTC