What hurts
Copilot answers out of whatever is in SharePoint. That includes the 2019 tender folder, four copies of a policy nobody approved, and a departed employee’s drafts. Nobody wants to delete any of it, so it sits there, and Copilot keeps reading it.
Purview picked up a new tool for this. Retention policies and retention labels can now move SharePoint Online and OneDrive files into Microsoft 365 Archive as an intermediate step, before the retention period expires. It reached general availability between late June and mid-July 2026, it’s off by default, and it needs an admin to switch it on.
Every write-up frames it as a storage play: archive tier costs 75 percent less than active SharePoint storage. That framing is wrong for most of the organisations I work with, and it buries the part that actually matters.
Why your storage bill will not change
Microsoft 365 Archive is billed at $0.05 USD per GB per month, and the meter is conditional. It charges only when archived plus active storage exceeds your tenant’s licensed SharePoint quota. Under the quota, the additional cost is zero.
Your pooled quota is 1 TB plus 10 GB per licensed user.
Quota is 1 TB plus 10 GB per licensed user
Typical usage figures are illustrative, but the shape holds: most organisations under 500 users are nowhere near the quota, so the meter never fires.
Run your own numbers before you believe a savings pitch. Open the SharePoint admin center, go to Sites → Active sites, and read the bar at the top right. It shows what you’ve used against your total, and it takes about ten seconds.
SharePoint admin center · Sites, Active sites
The bar top right is the whole answer. Under your quota, the archive meter never charges you, no matter how much you archive.
If you’re at 40 percent of quota, archiving 200 GB saves you nothing, because you weren’t paying for that 200 GB in the first place.
The feature still earns its place, just not on the storage line of the budget.
The reason to turn it on
Archived content is excluded from Copilot indexing. Microsoft’s own framing is that this helps answer relevance, which is a polite way of saying Copilot stops reading your digital debris.
What it does not do is hide anything from compliance.
What the archive action does and does not touch
The left column is why you would do it. The right column is why it is safe to.
The two columns together are the whole feature. Files stop feeding Copilot and third-party AI tools, and they stay indexed for eDiscovery, still under retention processing, still subject to legal hold. You are not deleting anything and you are not putting anything beyond reach.
It’s the same problem the HR folder post solves with permissions, approached from the other end. Permissions decide who can see a file. Archiving decides whether Copilot should be reading it at all.
Four things that bite
Reactivation is free, but sticky. The reactivation fee was eliminated on March 31, 2025. Pulling a file back costs nothing. The catch is that you can’t re-archive newly reactivated content for four months, so a file someone retrieves stays in active storage, and back in Copilot’s index, for a third of a year. That exemption doesn’t apply to OneDrive accounts.
Billing must stay healthy. If Microsoft 365 Archive is switched off, or the billing subscription lapses, archived content stays archived and can still be reactivated, but new archive actions are blocked and archived content counts as active storage again. A lapsed card quietly puts you back over quota.
Unlicensed OneDrive accounts are billed differently. They’re charged per GB archived and per GB reactivated, and they can’t use spare SharePoint storage to avoid the charge. Departed-employee OneDrive accounts are exactly the content you’d want to archive, so price that one separately.
It’s an addition to a retention policy, not a replacement. The archive step happens before the retention period expires. Deletion still happens on schedule. If your retention schedule is wrong, archiving files on the way to the wrong outcome doesn’t fix it.
How to fix it
- Check your quota position in the SharePoint admin center. This tells you whether cost is even part of the conversation.
- Set up Microsoft 365 Archive with pay-as-you-go billing, if it isn’t already. Nothing works without it.
- Pick the retention policies worth changing. Start with the ones covering old project sites and departed-user content, not live team libraries.
- Add the archive action in Purview Data Lifecycle Management, and keep the deletion schedule you already had.
- Test the retrieval path with one file before you scale it, so you find out what reactivation feels like for a user while it’s still a test.
Step 2 is not optional, and there’s an easy way to check whether you’ve done it. Create a retention policy, scope it to SharePoint and OneDrive, and look at the retention settings step.
Purview · Data Lifecycle Management
Three options, no archive action. That is what the step looks like in a tenant where Microsoft 365 Archive has not been set up, and no amount of clicking will surface it until billing is in place.
Bottom line
If someone sells you this as a storage saving, check your quota first. Under it the saving is zero, and the pitch is noise.
Turn it on anyway. Getting stale content out of Copilot’s index without deleting it, losing eDiscovery coverage, or breaking a legal hold is a genuinely good trade, and until this shipped there was no clean way to do it.