After forcing MFA on all Office365 users setting up an app password for Outlook was annoying to do. After some searching I found two articles from Microsoft on how to enable modern authentication.
For Exchange:
- To View the current setting:
Get-OrganizationConfig | Format-Table Name,OAuth* -Auto
- To Change the Setting:
Set-OrganizationConfig -OAuth2ClientProfileEnabled $true
Once that is done you need to do the following on Outlook 2016 (2013 is covered in the link):
- Go to this location in the registry:
HKEY_CURRENT_USER\Software\Microsoft\Exchange
- Add DWORD (32bit) key:
AlwaysUseMSOAuthForAutoDiscover
- Change the value to be:
1
Close and open Outlook and it should take the new setting.
References:
https://docs.microsoft.com/en-us/exchange/clients-and-mobile-in-exchange-online/enable-or-disable-modern-authentication-in-exchange-online
https://docs.microsoft.com/en-us/exchange/troubleshoot/modern-authentication/modern-authentication-configuration