MS-900 Practice Question: Describe Microsoft 365 pricing, licensing, and support
A global organization with 20,000 users is migrating from on-premises Exchange to Exchange Online. They have a mix of Microsoft 365 E3 and E5 licenses. The compliance team requires that all mailboxes be placed on litigation hold within 24 hours of the migration. Which licensing consideration is critical?
⚠ Common exam trap
A common mix-up: candidates assume litigation hold is a standard feature available with any Exchange Online license, but Microsoft specifically requires Exchange Online Plan 2 (included in E5 or as an add-on to E3) for this capability.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Users with E3 licenses need an Exchange Online Plan 2 add-on for litigation hold
Litigation hold in Exchange Online requires an Exchange Online Plan 2 license or an Exchange Online Plan 1 license with the Exchange Online Archiving add-on. Microsoft 365 E3 includes Exchange Online Plan 1, which does not support litigation hold by itself. Therefore, users with E3 licenses need the Exchange Online Plan 2 add-on (or the equivalent Archiving add-on) to enable litigation hold. E5 licenses include Exchange Online Plan 2, so those users already have the necessary licensing.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
All users must have Microsoft 365 E5 licenses to use litigation hold
Why it's wrong here
Litigation hold is a mailbox-level feature available in Exchange Online Plan 2, not exclusive to the entire Microsoft 365 E5 suite. While E5 includes Exchange Online Plan 2, E3 users can also gain litigation hold capability by purchasing the Exchange Online Plan 2 add-on. Thus, the claim that all users must have E5 licenses to use litigation hold is incorrect.
- ✗
Downgrade E5 users to E3 to simplify licensing
Why it's wrong here
Downgrading E5 users to E3 would remove litigation hold functionality because E3 includes only Exchange Online Plan 1, which does not support litigation hold. To restore the feature, you would need to add an Exchange Online Plan 2 add-on, complicating licensing rather than simplifying it. Additionally, this downgrade sacrifices other E5-only security and compliance features, making it an inefficient solution to the question at hand.
- ✗
Litigation hold is automatically enabled for all mailboxes in Exchange Online
Why it's wrong here
Litigation hold is not automatically enabled for any mailboxes; an administrator must explicitly place a mailbox on litigation hold using the Exchange admin center or PowerShell. Even if a user is properly licensed, litigation hold remains off until the administrator takes that specific action. The purpose of the feature is to preserve all mailbox content for legal discovery, but it requires proactive configuration, not automatic activation.
- ✓
Users with E3 licenses need an Exchange Online Plan 2 add-on for litigation hold
Why this is correct
In Microsoft 365, litigation hold is a mailbox-specific compliance feature that requires the mailbox to be assigned Exchange Online Plan 2. Standard E3 licenses include Exchange Online Plan 1, which lacks the necessary capabilities for litigation hold. Therefore, an E3 user must purchase the Exchange Online Plan 2 add-on to enable litigation hold. This is the correct licensing approach for organizations needing this preservation feature without upgrading to E5.
Go deeper
Related to this question
Learn chapter
Shared Mailboxes and Distribution Lists
Key term
Exchange Online
Exchange Online is Microsoft's cloud-based email, calendar, and contact hosting service that is part of the Microsoft 365 suite, allowing organizations to manage corporate messaging without maintaining their own mail servers.
Key term
Microsoft 365
Microsoft 365 is a subscription-based cloud service from Microsoft that combines productivity tools like Office apps with security, device management, and online storage.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
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