A cloud-based service included in Microsoft 365, delivering scalable messaging and collaboration features with simplified management and automatic updates.
Please refer to this link: Basic Authentication Deprecation in Exchange Online – May 2022 Update
We are not turning off SMTP AUTH. We have turned off SMTP AUTH for millions of tenants not using it, but if SMTP AUTH is enabled in your tenant, it’s because we see usage and so we won’t touch it. We do recommend you disable it at the tenant level and re-enable it only for those user accounts that still need it.
You can still use Basic Auth for SMTP if you would like to.
What are the needs for modern authentication? Will MFA / Conditional access do the job? Or does it need an Enterprise App with admin consent / Oauth token?
It may depend on how the application is working with Office 365.
For example you may use Oauth2.
More information can be found here:
Authenticate an IMAP, POP or SMTP connection using OAuth
Announcing OAuth 2.0 support for IMAP and SMTP AUTH protocols in Exchange Online
You may need to enable modern authentication to use MFA. Conditional access is a feature to control user access with methods like enforcing MFA.
So they are not the needs for modern authentication.
If you have further questions or need help with how to configure the application, please consider posting in the Exchange development forum(add the office-exchange-server-dev tag to your question).
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