Microsoft Authenticator App unable to sign in and recover backup from iCloud

Question

On my iPhone, I created an iCloud backup using my Microsoft personal account as recovery account and checked that the backup was successful as described here:

https://support.microsoft.com/en-us/account-billing/back-up-account-credentials-in-microsoft-authenticator-bb939936-7a8d-4e88-bc43-49bc1a700a40

I then uninstalled the App and reinstalled it. To restore the OTP accounts, I followed the procedure described here:

https://support.microsoft.com/en-us/account-billing/restore-account-credentials-from-microsoft-authenticator-ce53096e-1e1c-4840-9e32-1618bc33cd43

When tapping on "Begin recovery", I can see my recovery account and select it, but then I get an error message in the login prompt with my Microsoft personal account:

"Signing in to this device requires a password on your account. Visit undefined to add a password to your account. After adding a password, come back to sign in to this device."

I do have a password for my MSFT account, but it is 2FA-protected, and because I cannot restore the OTP, I cannot use it. So it is a doom loop.

What to do now?

Answer 1

OK, let me answer my own question after some more research:

The error can appear if you have enabled Passwordless account in your Microsoft account Additional security options, as described here.

This effectively removes your "password" entry under "Ways to prove who you are". This setting is separate from configuring a passkey - that's what confused me first.

To summarize: Microsoft Authenticator backup recovery requires a password for sign-in. You will need to disable Passwordless account temporarily to restore your data. Then you can turn it back on.