If your organization relies on SharePoint Online for file sharing and collaboration, a significant change is coming your way. Starting July 1, 2025, Microsoft is tightening the screws on how One-Time Passcode (OTP) sharing links work in SharePoint Online and OneDrive. These changes are aimed at enhancing security but they come with real implications for how your users collaborate with external partners. In this article you'll learn: 

• What’s changing with sharing links in SharePoint and OneDrive
• Why this matters to your external collaboration model
• What you need to consider to stay productive and secure, including a smart workaround at the end

Beginning July 1, 2025, Microsoft will deprecate OTP-based external sharing links for SharePoint Online and OneDrive. This change affects anonymous links that allow people outside your organization to access content via a verification code sent to their email, even if they don’t have a Microsoft account. Key Impacts:

• OTP-based access will no longer be supported
• External recipients must now authenticate using Entra ID (formerly Azure AD)
• Anyone accessing content via a SharePoint sharing link must be a “guest” in your Entra ID tenant

In short: no Entra ID guest account, no access.

he OTP method had its flaws, it allowed users to bypass organizational security policies and access sensitive content via a basic email verification process. While this made collaboration easier, it created loopholes in auditability and identity verification. By requiring Entra ID guest accounts for access, Microsoft strengthens:

• Auditing and compliance capabilities
• Policy enforcement (like MFA or conditional access)
• And identity traceability for external users

From a security standpoint, this is a win. But from a usability and management perspective? Not so much.

IT admins and security teams will now have to manage a flood of Entra ID guest accounts, which introduces a number of challenges:

• Increased administrative overhead: IT teams must now provision and govern guest identities for every external collaborator
• User confusion: External users unfamiliar with Microsoft accounts may struggle to log in, increasing support tickets
• Broken workflows: Legacy OTP sharing links will stop working, disrupting external collaboration unless proactively updated

This change particularly hurts organizations that:

• Share files externally on an ad-hoc basis
• Work with freelancers, clients, or vendors without Microsoft accounts
• Or operate in industries where seamless file access is critical

You do have some options, but none are ideal:

• Bulk-create guest accounts via Entra ID, which is time-consuming and requires governance.
• Use SharePoint file requests, which only work one-way (external users can upload files to you, but can’t see/download anything).
• Switch to secure email or file transfer services, which adds friction and silos information outside SharePoint.

In each case, you're either compromising user experience or increasing IT workload or both.

Microsoft's new policy underscores a broader trend: the ecosystem is getting more secure, but also more complex and expensive to manage. Every new compliance requirement (MFA, Entra ID guests, retention policies) adds cost and overhead. And as more data piles up in SharePoint and OneDrive, your storage bills keep growing, especially if you need to keep old versions or unused files "just in case." You're paying more, managing more, and still scrambling to stay compliant.