Is OneDrive Secure? A Comprehensive Security Analysis for 2025

Microsoft OneDrive is used by over 250 million users worldwide for cloud storage and document sharing. But when it comes to handling sensitive business information, many organizations question whether OneDrive's security measures are sufficient. In this comprehensive analysis, we'll examine OneDrive's security features, identify its limitations, and explore when you might need a more robust solution.

OneDrive security: what you get vs. what you need

OneDrive provides basic security features that work well for everyday document sharing, but falls short when dealing with highly sensitive information. Understanding these limitations is crucial for organizations handling confidential data. For step-by-step instructions on sharing, see our guide on how to share documents on OneDrive.

OneDrive's security features

OneDrive offers several fundamental security measures:

• Two-factor authentication (2FA): Adds an extra layer of protection to your account

• Link sharing with permissions: Control who can view, edit, or comment on shared files

• Password protection for links: Add passwords to shared links for additional security

• Expiration dates: Set automatic expiration for shared links

• Basic activity monitoring: Track file access and sharing activities

• Encryption in transit and at rest: Microsoft encrypts data using industry-standard protocols

However, these features are designed for general collaboration rather than enterprise-grade document security.

Critical security limitations of OneDrive

1. Limited document protection features

OneDrive lacks essential security features that are standard in dedicated data room solutions:

• No dynamic watermarking: OneDrive cannot add viewer-specific watermarks to documents

• No screenshot protection: Users can freely capture screenshots of sensitive documents

• No print screen restrictions: No ability to prevent screen captures or printing

• Limited download controls: Basic download restrictions without granular control

• No built-in redaction tools: Cannot redact sensitive information from documents

2. Insufficient analytics and tracking

OneDrive's analytics capabilities are limited, especially for external users. For a deeper look at what you can and can't track, check out our article on OneDrive analytics.

3. Privacy and data access concerns

Microsoft's access to OneDrive content raises privacy concerns. If you want to understand how OneDrive is used as a data room and its privacy implications, read our OneDrive data room overview.

When OneDrive security falls short

M&A and due diligence processes

During mergers and acquisitions, companies share highly sensitive information including:

• Financial statements and projections

• Legal documents and contracts

• Customer data and intellectual property

• Strategic plans and competitive information

If you need to share folders with external users during these processes, see our guide on how to share OneDrive folders with external users.

OneDrive's basic security features are insufficient for these high-stakes transactions where data confidentiality is paramount.

Fundraising and investor relations

When sharing documents with potential investors, you need:

• Detailed tracking: Know exactly who viewed what and for how long

• Watermarking: Deter unauthorized sharing with viewer-specific watermarks

• Advanced access controls: Granular permissions for different investor types

• Comprehensive audit trails: Complete records for compliance and transparency

OneDrive's limited tracking and protection features make it unsuitable for investor document sharing.

Legal and compliance requirements

Many industries have strict compliance requirements that OneDrive cannot meet:

• Regulatory compliance: Industries like healthcare, finance, and legal require specific security measures

• Audit requirements: Need for comprehensive audit trails and detailed reporting

• Data residency: Requirements for data to be stored in specific geographic locations

• Access controls: Granular permissions and detailed access logging

Real-world security scenarios

Enhanced security with Peony

Peony closes OneDrive's security gaps by providing dynamic watermarking, screenshot protection, granular access controls, advanced link security, NDA enforcement, comprehensive analytics, and options for custom domains.

With Peony, you can instantly add viewer information to every document, block unauthorized screen captures, set detailed permissions, require NDA acceptance, and track exactly who viewed your files, for how long, and what they did—all with full control and professional presentation.

Key advantages of Peony over OneDrive:

• Dynamic watermarking: Automatically adds viewer information to prevent unauthorized sharing
• Screenshot protection: Blocks unauthorized screen captures and print screens
• Advanced analytics: Detailed page-by-page tracking and engagement insights
• Professional presentation: Custom branding and clean URLs for business use
• Simple pricing: $40/month per user with unlimited documents and features

Try Peony's secure document sharing

When to use OneDrive vs. when to upgrade

OneDrive is suitable for:

• Internal team collaboration: Sharing documents within your organization

• Basic file storage: General document storage and backup

• Simple sharing: Sharing non-sensitive documents with external parties

• Microsoft ecosystem integration: When working primarily with Office applications

• Cost-conscious organizations: When budget is a primary concern

Consider upgrading to Peony when:

• Handling sensitive information: Financial data, legal documents, intellectual property

• Conducting due diligence: M&A, fundraising, or investment processes

• Compliance requirements: Industries with strict security regulations

• Detailed analytics needed: Understanding document engagement and viewer behavior

• Advanced security required: Watermarking, screenshot protection, detailed tracking

• External collaboration: Sharing with investors, clients, or partners

Conclusion: is OneDrive secure enough?

OneDrive provides adequate security for general business collaboration and basic document sharing. However, for organizations handling sensitive information, conducting due diligence, or requiring detailed analytics, OneDrive's security features are insufficient.

The Bottom Line: OneDrive is secure for everyday use but lacks the advanced protection features needed for sensitive business processes. Organizations requiring enterprise-grade document security should consider dedicated solutions like Peony that offer dynamic watermarking, comprehensive analytics, and advanced access controls.

For most business users, OneDrive serves as a good starting point for document sharing. But when your documents contain sensitive information or you need detailed insights into viewer engagement, upgrading to a more robust solution becomes essential.

Explore Peony's secure data room solution

FAQ

Is OneDrive secure for business use?

OneDrive is secure for basic business use and internal collaboration. However, it lacks advanced security features needed for sensitive business processes like due diligence, fundraising, or sharing with external parties.

Can OneDrive be used for due diligence?

OneDrive is not recommended for due diligence processes due to limited analytics, lack of dynamic watermarking, insufficient access controls, and no screenshot protection. Dedicated solutions like Peony provide the security and tracking needed for sensitive business transactions.

Does OneDrive track who views documents?

OneDrive provides basic activity monitoring for internal users but has limited tracking capabilities for external users. It cannot provide detailed analytics on who viewed specific pages or how long they spent on each section.

Can I add watermarks to OneDrive documents?

No, OneDrive does not support dynamic watermarking. You cannot add viewer-specific watermarks to documents, which is a critical security feature for preventing unauthorized sharing.

Is OneDrive suitable for sharing with investors?

OneDrive is not ideal for sharing with investors due to limited analytics, lack of watermarking, and insufficient access controls. Investors expect detailed tracking and professional presentation, which OneDrive cannot provide.

What are the main security limitations of OneDrive?

The main limitations include: no dynamic watermarking, no screenshot protection, limited analytics, basic access controls, no built-in NDA enforcement, and insufficient tracking for external users.

Why Choose Peony for Secure Document Sharing

Peony is purpose-built for businesses that need more than basic document sharing:

Professional features:

• Dynamic watermarking with viewer information
• Screenshot and print screen protection
• Detailed page-by-page analytics
• Custom branding and professional URLs
• Advanced access controls and permissions

Trusted by successful founders:

• "Peony is the best way to share files. Period. It's way more professional than Google Drive links" - Rango Ramesh, Founder & CEO, HeySimulate (Techstars)
• "The simplest way to populate and share data rooms with investors" - Mark Petrov, Loop, Head of Financials

Simple pricing:

• $40/month per user
• Unlimited documents and features
• No hidden costs or per-page charges

Start sharing documents securely today