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Nesting Groups
Am I missing something or is it not possible currently to nest O365 groups?
Just use Distribution lists if that's all you want, they are entirely just as available as they have ever been, fully support nesting etc.
Alternatively if you read up, TonyRedmond explains that you can nest an Office 365 group within a DL via powershell if you absolutely must.
Nesting groups creates all sorts of permissions issues. These don't occur for distribution groups, but they do when a group has a unique identity that can be used for accessing information.
That just makes the usefulness of the O365 groups about half as useful as it could be. Instead of just keeping each individual team's group up to date and then nesting it in the department group I now have to duplicate work keeping both groups up to date.
Well, you're entitled to your opinion, but before you make such an assertion you should consider the purpose of the different groups and why those groups exist. A security group is intended to secure resources to a set of accounts. The way that security groups function has not changed much since Windows NT 3.1 in 1993. An Office 365 group is a new entity intended to allow members of the group access to various shared resources belonging to the group across multiple workloads. The two purposes are entirely different. You can't compare one to the other apart from the fact that they are two types of groups.