What is Microsoft Entra External ID? A complete guide

Jump to: What is Microsoft Entra External ID? | How Organizations are using External ID | Capabilities of External ID | Costs | Conclusion

If you follow anything happening in the identity world, you have probably noticed a shift – companies now need to manage not just their internal workforce, but everyone who interacts with them – customers signing up for apps, citizens accessing digital services, suppliers logging into portals, and partners collaborating across ecosystems.

Modern applications increasingly serve external audiences, and delivering smooth, secure access has moved from “nice to have” to “non-negotiable.”

Microsoft Entra External ID is Microsoft’s answer to this growing demand.

Built on the same enterprise-grade foundations as Microsoft Entra ID, External ID is Microsoft’s modern Customer Identity and Access Management (CIAM) platform designed specifically for public-facing applications. It enables organizations to deliver intuitive, branded sign-up and sign-in experiences, apply strong adaptive security controls, and scale to millions of external users. While it shares similarities with Microsoft Entra ID, External ID is purpose-built for customer and partner access, designed to address the flexibility, usability and internet-facing resilience expectations of customers and partners.

Oxford Computer Group has been helping customers design and implement External ID for a wide range of scenarios, from large customer portals to highly secure partner environments.

In this article, we examine what External ID is, why organizations are adopting it, and the key capabilities available today.

What is Microsoft Entra External ID?

Microsoft Entra External ID is Microsoft’s next-generation CIAM offering for people outside your organization. Since its release in May 2024, new features have been coming thick and fast, and we expect this momentum to continue as Microsoft continues to invest in the platform.

External ID provides a secure and flexible way for organizations to authenticate and authorise external users – including customers and partners. External ID is purpose-built for public-facing applications that require:

Scalable registration and onboarding
Branded and flexible user journeys
Social and federated identity providers
Application-level policies and security controls

Azure AD B2C, Microsoft’s predecessor CIAM platform, remains supported until 2030, but no new tenants can be created. Microsoft’s strategic direction is clear; External ID is the CIAM platform organizations should adopt going forward.

How organizations are using External ID today

Oxford Computer Group customers are using External ID across a range of use cases, including:

Large-scale customer portals – users register (sign-up) with social accounts such as Google or Apple, or new credentials to seamlessly access the customer-facing portal
Modern authentication across multiple applications – External ID serves as a single, central identity platform, replacing multiple external-facing services – delivering consistent sign-in experiences and improved security posture
Secure partner access – partners are pre-registered via a controlled user creation process, and MFA is enforced by default for enhanced protection

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Key capabilities of External ID

Below is an overview of the major features available today – including some that are currently in public preview.

Flexible sign-up experiences

External ID supports a variety of registration methods:

Social identities such as Google, Facebook, or Apple
Federation with OpenID Connect identity providers
New account creation with email address or username (e.g. customer ID or account number) and password
Email-based one-time passcodes (OTP), fully branded

Sign-up journeys can be tailored using event-based extensibility:

On attribute collection start – pre-fill attributes via REST APIs
On attribute collection submit – validate inputs and enforce business logic before the account is created, e.g. allow the sign-up or display an error and block the sign-up

This enables advanced scenarios like CRM integration, attribute enrichment, and eligibility onboarding logic.

Sign-in options

Users sign in using the method they selected at registration. Those using local accounts can reset their password through branded self-service flows.

Advanced authorization and token enrichment

Applications often require more than just the user’s identity – they need context. External ID enables applications to receive tokens enriched with:

Attribute values collected during sign-up
Attributes stored on the user’s object
The user’s group membership or application roles assignments
Values retrieved from external systems

This enables fine-grained authorization inside the application based on user type, organization, region, licensing, subscription level or any other application-specific logic.

Security, MFA, and risk protection

External ID includes real-time built-in security capabilities to reduce account compromise and fraud:

Conditional MFA based on risk signals
Sign-in blocking for suspicious activity
Risk-based detection using Microsoft threat intelligence
Step-up authentication for sensitive operations (e.g., updating profile data or accessing premium features)

These controls can be applied globally, per application, or for targeted user groups.

Branding and user experience

Organizations can customize:

Sign-up and sign-in pages (application-specific branded pages are currently in preview)
Branding for emails containing OTPs

If a dedicated mobile or desktop app is used to access the application, native authentication enables complete customization of the sign-in experiences, but it requires increased developer effort.

Analytics, reports and auditing

The Usage and Insights feature provides a comprehensive view of authentication patterns and user activity and engagement for the applications based on activity and audit logs. The data can be surfaced through dashboards in the Microsoft Entra Admin Centre Portal, or they can be integrated into Power BI, perhaps combining with organization data, for deeper analytics.

Developer support

Microsoft has an extensive library of code samples, documentation, and tutorials on how to integrate web applications, mobile applications, and APIs with Microsoft Entra External ID.

Applications can use Microsoft Entra External ID as a shared identity store and can update user accounts using the Microsoft Graph API.

Costs

External ID uses a monthly active users (MAU) based licensing model. The base service is free for the first 50,000 MAUs, then $0.03 per month for each active user (as of December 2025). There are additional charges for SMS authentication and premium features.

Conclusion

Microsoft Entra External ID is the modern platform for delivering secure, seamless, and scalable access to customer and partner applications. It incorporates industry-leading security, best practices, deep integration with Microsoft’s broader identity and security stack, and a rapidly expanding feature set.

As organizations look to modernise external access and invest in improved digital experiences, External ID offers a secure, future-ready foundation. Whether you’re evaluating your first CIAM implementation or planning a migration, our team can help you navigate the options and design a solution aligned with your business goals.

Ready to modernize external access?

Our identity specialists can help you design, implement, and optimise your External ID environment—from user journey design to application integration and long-term governance.

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What is Microsoft Entra External ID? A complete guide to Microsoft’s CIAM platform