Exchange Online to retire Basic auth for Client Submission (SMTP AUTH)

https://techcommunity.microsoft.com/t5/exchange-team-blog/public-preview-high-volume-email-for-microsoft-365/ba-p/4102271

Authentication
During the Preview, High Volume Email (HVE) for Microsoft 365 requires SMTP Basic Authentication. Once it reaches General Availability, OAuth authentication is expected to be supported.

A few additional notes around authentication:

• If Security Defaults is enabled, all basic authentication, including SMTP, is disabled, making HVE non-functional.
• HVE accounts can operate even if SMTPClientAuthenticationDisabled is set to True within TransportConfig due to the use of a custom endpoint.
  To avoid any impact from authentication policies, if these are being utilized, it is important for customers to ensure AllowBasicAuthSmtp is enabled in the policy that applies to the HVE account. Custom authentication policies can be applied to the HVE accounts as needed.
• Note that all federated users must be created on-premises and must be synced using the Microsoft Azure Active Directory Sync Tool, thus are not applicable for HVE.