Microsoft 365's Email Crackdown Reshapes Business Communication

Starting October 15, 2025, businesses using Microsoft 365's default onmicrosoft email domains will face significant restrictions. Microsoft will cap outgoing emails at 100 external recipients per day to curb spam. The change, announced on Microsoft's Exchange Team blog in August 2025, targets new tenants exploiting shared domains for quick spam bursts. Legitimate users may need to adopt custom domains quickly to avoid bounced messages.

The rationale for this change is rooted in anti-spam efforts. Spammers create temporary tenants, blast emails, and taint the shared domain's reputation, affecting everyone. Data from Microsoft's pilot throttling in early 2025 showed a double-digit drop in block-list hits, indicating the tactic's effectiveness. For small businesses or nonprofits still using these default domains, the sudden limit could disrupt critical communications, like donor receipts or customer support.

Switching to a custom domain, such as yourbusiness.com, helps organizations comply with Microsoft's cap and builds brand trust. It also aligns with email authentication standards like DKIM and DMARC, which protect against phishing. Unlike shared onmicrosoft domains, where one bad actor can negatively impact everyone's deliverability, a custom domain gives you control over your email reputation.

A case study from the research involved a mid-size charity that sent 1,200 donor receipts monthly via a default domain. When pilot throttling was implemented, half its emails bounced, forcing a rushed migration to a custom domain in three weeks. This led to smoother email flow and a stronger brand presence. Larger enterprises, already on custom domains, barely notice the change but benefit from a cleaner reputation pool.

Microsoft joins other providers in tightening email rules. In 2024, Google Workspace capped external recipients at 2,000 per day, pushing users toward authenticated domains. A small retail business, for instance, struggled with Google's limit when sending promotional emails. After switching to a custom domain, it met the cap and also saw better open rates due to improved deliverability.

Both companies highlight a broader trend: email providers are increasing restrictions on shared domains to combat spam. Studies from ACM IMC 2024 show 60% of spam campaigns exploit free domains within hours of setup. Custom domains, paired with proper DNS settings, reduce this risk, becoming essential for businesses serious about email reliability.

Switching domains isn't always simple. Small businesses on trial subscriptions may lack the budget or know-how to configure DNS records. Legacy systems, like multifunction printers or Azure Logic Apps, often rely on default domains, requiring tedious updates. A regional subsidiary using a default domain for low-volume alerts might overlook the change entirely, which could lead to bounced emails.

However, this shift presents new opportunities. Domain registrars are likely to see a surge in purchases, and IT consultants may find new projects helping businesses migrate. Microsoft could ease the transition by partnering with registrars for discounted domains or offering open-source migration scripts. For businesses, the payoff is clear: a custom domain strengthens your brand, boosts deliverability, and future-proofs your email setup.

IT administrators need to update SMTP addresses and credentials across devices and apps promptly. Start by securing a domain that reflects your brand, then configure SPF, DKIM, and DMARC to enhance security. Test thoroughly to avoid spoofing risks during migration. Email security experts agree: these steps are baseline hygiene for 2025's email landscape.

The change may feel like a hurdle, especially for resource-strapped organizations. However, it is also a chance to rethink how your business presents itself online. A custom domain helps meet Microsoft's rules, building trust and ensuring reliability in a world where email remains a cornerstone of communication.