Microsoft Mandates Passkeys as Default Authentication, Phasing Out SMS/voice MFA

Microsoft announced mandatory passkeys for Entra ID, with phased retirement of SMS/voice MFA starting Sept 2026 and full removal by Feb 2027. This regulatory-like move from a major platform vendor will force enterprise security budget reallocation, creating tailwinds for passkey vendors and headwinds for legacy telecom-based MFA. Investors should watch for third-party telecom providers and passkey infrastructure plays.