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Our users tend to put pst files on their OneDrive. This alone is not a big problem, but we have retention policy and version control on. Meaning, that whenever Outlook touches the pst file and adds a timestamp, a new copy is made. This, in case of a 1GB pst file, can very quick fill up their drive. The solution is of course removing the pst from the drive, but this cannot be done due to the retention policy.

So, my question is: can we exclude all pst files from the retention policies somehow and/or reduce the number of versions kept for this file type?

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Go to https://protection.office.com/retention and find the specific retention policy that is stopping you from deleting the files. Then edit the policy and remove 'OneDrive' as one of the 'Locations'. Save the changes.

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Now, the files under OneDrive shouldn't be under Retention any more and you can delete the PST files. Once the delete is done, you might want to re-edit the retention policy to include 'OneDrive' or create a new policy with 'Advanced' settings for 'OneDrive' Location only, so that the policy can be applied based on specific contents.

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For removing files from 'Preservation Hold', there is an User Voice entry created and you might want to vote for it.

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