[German]Confusion surrounds the feature rolled out by Microsoft in June 2025, which ensures that Microsoft 365 apps store their backups of document files on OneDrive. This functionality does not appear to be available in Europe (yet). It is also known how administrators can control this storage using GPO.
What exactly is MS 365 app storage?
There are now two processes that revolve around the question "where do Microsoft 365 apps such as Word, Excel, etc. store their documents?"
MS 365 app backup in the cloud
First, there is the function for creating backups. In April 2025, Microsoft announced that Microsoft 365 applications would prompt authorized users via the message bar in Word, Excel, and PowerPoint to back up files to OneDrive.
This affected organizations whose users are not registered in Known Folder Move (KFM) and who receive the message ("BACK UP THIS DOCUMENT: Share this and other files with OneDrive and collaborate with others").
Microsoft has updated the relevant article MC1053121 – Microsoft 365 apps: We will prompt users to back up their files in Microsoft OneDrive (new info) on June 26, 2025, and adjusted the timeline. I addressed this at the beginning of August 2025 in the German blog post Microsoft 365: Apps speichern Backups auf OneDrive, wie habt ihr es geregelt. It also outlines how OneDrive backups can be prevented using group policies.
Word creates documents on OneDrive
And then there was the announcement that Microsoft Word would be modified so that this application would automatically create documents in the cloud instead of locally in the future. It was said to already be implemented in Insider Previews. For Microsoft, this change is an opportunity to use data for AI training and sell more cloud storage. From a GDPR perspective, this is actually a no-go for European users. I addressed this information at the end of August 2025 in Microsoft Word should automatically save to the cloud. It was unclear how administrators could prevent this via group policies.
Word OneDrive storage not available in Europe
German blogger Martin Geuß took a closer look at the issue of Word creating documents on OneDrive. He has access to an Office 365 Insider Preview and was unable to reproduce the behavior there. He addressed this in an article published on Dr. Windows on September 2, 2025, entitled Microsoft Word speichert automatisch in der Cloud – Verwirrung um angekündigte Neuerung.
Martin writes that the Word feature for automatically creating documents in the cloud on OneDrive is not available in his version of Word (2509), even though it is implemented in the build. Martin speculates that Microsoft can only implement such a feature in Europe if competitors are not disadvantaged. Thanks to the Digital Markets Act (DMA). His speculation is therefore that this innovation will only be implemented in the EU once the interface for alternative cloud storage services has been integrated.
Disable OneDrive storage via GPO
The more exciting part that Martin Geuß has uncovered concerns the ability for administrators to disable the creation of new documents on OneDrive in Word via group policy. According to Martin, Microsoft has made a statement to this effect in the Microsoft 365 Admin Center under message ID MC1137593.
I checked, and MC1137593 has been around since August 18, 2025 (I could have noticed the message, but I overlooked it because of the "noise in posts" in the Microsoft 365 Admin Center). It states that IT administrators can restrict the creation of new files in Word, Excel, and PowerPoint on Windows to cloud storage locations, thereby improving security and compliance.
This policy, which can be deployed via Group Policy starting in August 2025, restricts the saving of new files to OneDrive, SharePoint, or third-party clouds, thereby promoting the use and protection of the cloud.
IT administrators can configure Windows applications such as Word, Excel, and PowerPoint so that new files can only be created in cloud storage locations (OneDrive, SharePoint, or third-party clouds).
This configuration, named enablecloudonlysaveasmode, is only available to IT administrators and is deployed via Group Policy. This policy is now available in the administrative template files for Microsoft Office (version 5516.1000 or later). To apply the policy, users should be using a Windows version of Word, Excel, and PowerPoint version 2506 (build 19029.20000) or later.
This policy setting controls whether users of Word, Excel, and PowerPoint can use non-cloud locations (local and network) to create new files. If you enable this policy setting, users will only be able to use cloud locations to save and save new files. If you disable or do not configure this policy setting, users can use any storage location (cloud, local, and network) to save and store new files.
This policy setting only applies to subscription versions of Office, such as Microsoft 365 Apps for Enterprise. The public preview is scheduled to roll out from the end of August 2025 to mid-September 2025. General availability (worldwide) is scheduled to begin rolling out in mid-September 2025 and be completed by the end of September 2025. For more details, see MC1137593.
