Data Backup Problems

Fix Veeam Microsoft 365 Backup Fails After Basic Authentication Deprecation

Ayan Masood Oct 22, 2026 869 views

Question details

Users are unable to back up Exchange Online or OneDrive using Veeam Backup for Microsoft 365, encountering authentication failures and HTTP 401 errors after Basic Authentication was disabled.

How to Fix Veeam Microsoft 365 Backup Failures Due to Basic Authentication Deprecation

Product: Veeam Backup for Microsoft 365
Device & OS: not provided
Scenario: Running routine data backups for Microsoft 365 environments such as Exchange Online and OneDrive.
Observed behavior: The backup process fails entirely, returning bad username/password errors or HTTP 401 Unauthorized responses due to the forced deprecation of Basic Authentication by Microsoft.

Before you start

Ensure you have administrative access to both your Veeam Backup console and the Microsoft 365 admin center to manage Azure AD applications and authentication policies.

Solution 1Recommended

Update Veeam and Switch to Modern Authentication

Upgrading Veeam Backup for Microsoft 365 to a version that supports OAuth 2.0 and migrating your connection to Modern Authentication resolves the Basic Auth deprecation issue.

Microsoft has permanently disabled Basic Authentication for Exchange Online to improve security. Older versions of Veeam that rely on Basic Auth will consistently return HTTP 401 errors.

To restore backup functionality, you must use a Veeam version that supports Modern Authentication (app-only or with legacy protocols) and update your organization's connection settings within the Veeam console.

Verify and Update Veeam Backup Version

Check your current build in the Veeam console. If you are running an outdated version, download and install the latest patch or major release of Veeam Backup for Microsoft 365 from the official Veeam repository.

Edit the Microsoft 365 Organization

Open the Veeam Backup for Microsoft 365 console. Navigate to 'Organizations', right-click your affected Microsoft 365 tenant, and select 'Edit Organization'.

Select Modern Authentication

In the deployment wizard, proceed to the 'Microsoft 365 Connection Settings' step. Change the authentication method from Basic Authentication to 'Modern Authentication'.

Register or Select an Azure AD Application

Follow the prompts to either create a new Azure AD application automatically or use an existing one. Authenticate with your Microsoft 365 Global Administrator credentials to grant the necessary permissions, then finish the wizard.

Update Veeam and Switch to Modern Authentication

Authentication Restored: Once the organization is updated to Modern Authentication, your existing backup jobs will automatically resume without needing to be recreated.

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Frequently Asked Questions

Why did Microsoft deprecate Basic Authentication?

Microsoft disabled Basic Authentication because it is an outdated protocol highly vulnerable to credential stuffing and password spray attacks. Modern Authentication uses OAuth 2.0 and supports Multi-Factor Authentication (MFA), significantly improving security.

What does the HTTP 401 error mean in Veeam Backup?

An HTTP 401 Unauthorized error means that Veeam's connection request to Microsoft 365 was rejected. In this context, it happens because Microsoft 365 no longer accepts the Basic Authentication credentials being sent by the older Veeam configuration.

Do I need to recreate my Veeam backup jobs after switching to Modern Authentication?

No, you do not need to recreate your backup jobs. Updating the authentication method at the 'Organization' level within Veeam will automatically apply the new Modern Authentication credentials to all associated backup jobs.

Can I re-enable Basic Authentication in Microsoft 365 as a temporary fix?

No, Microsoft has permanently turned off Basic Authentication for Exchange Online across all tenants. It is no longer possible to request an exception or re-enable it. Transitioning to Modern Authentication is mandatory.

Migration & Recovery