New Policy Setting to Force Office to Save to Cloud Locations

Announced in Microsoft 365 message notification MC1137593 on 18 August 2025, Microsoft is introducing a new policy setting to force the creation (saving) of Office files in cloud locations. The setting only applies to Word, Excel, and PowerPoint files saved using the Microsoft 365 enterprise apps (subscription version of Office). No other Office version is affected.

Cloud locations means SharePoint Online, OneDrive for Business, and third-party cloud storage services like Dropbox or ShareFile (if the feature is enabled for the Microsoft 365 tenant).

The new policy enablecloudonlysaveasmode setting can be deployed to clients using Group policies or registry updates. The setting is available in the Administrative Template files for Microsoft Office (version 5516.1000 or newer) and applies to the Windows versions of the Microsoft 365 enterprise apps version 2506 (build 19029.2000) or later. I checked the feature using version 2508 (build 19127.20192) (Current Channel Preview).

MC1137593 says that public preview started to roll out in late August 2025 and is scheduled to complete by mid-September 2025. General availability for all clouds will start in mid-September 2025 and should be available everywhere by the end of September 2025. If you don’t take steps to apply the policy setting, nothing changes.

Higher Cloud Usage

Microsoft says that the new policy is “part of a new set of tools for IT Administrators to move their organizations towards higher Cloud usage and Increase security and compliance.” Increasing cloud usage adds stickiness to the Microsoft cloud because the more data that users store in SharePoint Online and OneDrive for Business, the harder it is to move to any other platform.

The point about increasing security and compliance is justified by the fact that SharePoint Online and OneDrive for Business are subject to the tenant’s security and compliance policies. It’s true that cloud files are more resilient than files stored on a local drive and it is very convenient to be able to move from PC to PC while keeping files available. However, everything depends on the network and if the network’s not available or you don’t want to use a potentially insecure network like free wi-fi, losing the ability to save files to the local drive can be a real pain. I often save copies of Offices files as PDFs to share with other people, and I don’t really want those PDFs cluttering up OneDrive.

Microsoft sometimes goes overboard in its enthusiasm to save files in OneDrive, like PowerShell modules. Some might consider this step to be in that category.

What Users See

The default situation is shown in Figure 1. No policy is configured, and the user can save to SharePoint Online, OneDrive for Business, the local hard drive, and other cloud services (configured through Add a Place).

With the policy setting enabled, Office applications are limited to cloud locations to save new files or save existing files as a new file (Figure 2). Note that the “This PC” and “Browse” (for folder) options are missing.

Updating Office with the Microsoft 365 Apps Policy

Microsoft 365 tenants can apply the setting to restrict saving to the cloud via a cloud policy configured in the Microsoft 365 Apps center. Search for the Restrict saving on non-cloud locations setting and change the value from not configured to enabled (Figure 3).

After saving the policy, its settings are applied by the click to run service and the new setting should be active within a day.

Like most Office settings, the change can be made manually by updating the system registry on a PC. In this case, it seems like the setting is controlled by two settings. The first enables the cloud only save mode by creating a new DWORD value called EnableCloudOnlySaveAsMode at HKEY_CURRENT_USERSOFTWAREMicrosoftOffice16.0CommonFileIO. The second apparently removes the UI options for non-cloud locations through another DWORD value called PreferCloudSaveLocations at HKEY_CURRENT_USERSoftwareMicrosoftOffice16.0CommonGeneral. Both values are set to 1 to enable or 0 to disable. When I tested, the settings worked on one PC and not on another. It took too long to figure out that the PC where things worked ran Current Channel (Preview) while the one where the feature didn’t work ran Current Channel.

A Change That Might Annoy Some

Some will hate this change and ask what’s the point of having a local drive if it’s inaccessible. Others might not notice that all files are stored in the cloud because they do that as the norm. And some will only notice the change when they go to save a file locally. I save most of what I do with Word, Excel, and PowerPoint in the cloud, so I guess that I’m in the last category.

If I was forced to live with storing all Office files in the cloud, I could adapt my workflow without much difficulty. Until a network outage occurs…

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