App passwords are designed to allow older, non-browser applications that do not understand modern authentication protocols to work with Microsoft 365 when multi-factor authentication (MFA) is enforced. These app passwords replace your traditional password and allow an app to bypass MFA.
However, it’s important to note that app passwords are intended for use with legacy applications that don’t support MFA prompts. They are automatically generated and are only entered once per application. There’s a limit of 40 app passwords per user.
Starting from October 1st, 2022, Microsoft has deprecated basic authentication in Exchange online, and as a result, app passwords will no longer work. This is because app passwords use basic authentication. The deprecation of basic authentication also prevents the use of app passwords with apps that don’t support two-step verification.
In our case we were trying to use AppPasswords to move client files to OneDrive but AppPasswords did not work their either. If you have an app that works with OneDrive and doesn’t support MFA, you will need to replace that app because app passwords are no longer supported.
Therefore, while app passwords were originally designed to allow certain applications to bypass MFA, they can no longer be used for this purpose due to the deprecation of basic authentication. It’s recommended to use modern authentication methods that support MFA.
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