How to setup Outlook (Oauth2) with 3rd party email login?

I have disabled outlook login for security reasons, but I am unable to login using Oauth2, I have to use an insecure app password. Outlook on android, Windows, Onedrive have no issues logging in with 3rd party email using Oauth2 via MS Authenticator.

EDIT: On top of it, I keep getting logged out several times a day while app is still running.

EDIT 2: And this the issue with app passwords. MS thinks that MS is hacking me.