Microsoft Purview Update: New Data Lifecycle Management (DLM) Billing Meter Explained

WHAT’S NEW THIS CYCLE

Microsoft has introduced a significant update to the billing model for Data Lifecycle Management (DLM) within Microsoft Purview. Effective October CY2026, DLM billing will shift from a volume-based meter (cost-per-GB retained) to a per-text-message meter for non-Microsoft 365 generative AI data. Specifically:

• Each generative AI prompt and response will be treated as an individual text message.
• Billing will be calculated at $6 per one million managed text messages per month.
• Retention and deletion continue to rely on Microsoft Purview retention settings configured in your tenant.

Admins can view this change in the Microsoft Purview compliance portal under Solutions > Data lifecycle management > Overview. The updated meter is integrated automatically for tenants, and no manual enablement is required.

WHAT’S COMING IN THE NEXT 90 DAYS

Microsoft has announced the following roadmap items related to DLM that admins should prepare for:

• Improved Retention Insights Dashboard (Q4 CY2026): Enhanced visuals and breakdowns by content type and storage location to help admins better manage data retained under DLM policies.
• Microsoft Purview API Updates (GA in November CY2026): New API endpoints for tracking the volume of text messages managed under DLM policies, allowing for granular reporting and cost forecasting.
• Cross-tenant Data Residency Reporting (Preview by December CY2026): Improved reporting on data residency compliance across multi-geo tenants, particularly relevant for regulated industries.

Review the Microsoft 365 Roadmap item #560324 for additional details.

THE UPGRADE

The move to a per-text-message billing model introduces important advantages for organizations:

• Cost Neutrality or Savings: Microsoft projects that most customers will experience neutral or reduced costs compared to the legacy volume-based billing model.
• Granular Billing Transparency: Billing now aligns with the actual number of managed objects (text messages), offering clearer insight into costs and more predictable budgeting.
• Improved Scalability: Organizations managing large volumes of small text-based data (e.g., generative AI prompts and responses) benefit from a model tailored to their data profile.

While the shift is expected to be cost-neutral for most tenants, it’s crucial to analyze your current DLM-managed data to identify any workloads (e.g., automated or high-volume systems) that could drive costs under the new model.

UNDERSTANDING DATA LIFECYCLE MANAGEMENT BILLING

DLM policies help organizations manage data retention, ensuring compliance with regulatory and business requirements. Previously, DLM billing was based on the total data volume retained, measured in gigabytes (GB). With the growing adoption of generative AI solutions, Microsoft is adapting its billing to account for the unique nature of text-based data generated by AI systems. Each prompt and response pair is now treated as an individual text message, counted against the total number of managed messages under DLM policies.

For instance, an exchange of five AI-generated prompts and responses would count as five text messages. These messages are managed using the same policies as emails, Teams messages, and documents, ensuring consistent retention and deletion practices across content types.

HOW TO DETECT YOUR IMPACT

To assess the potential impact of the billing change, you can use the Microsoft Graph PowerShell SDK to query existing DLM policies and calculate the number of managed items. Run the following script to generate a report:

Import-Module Microsoft.Graph.Compliance.Functions

Connect-MgGraph -Scopes "Compliance.Read.All"

# Fetch all DLM policies
$dlmPolicies = Get-MgCompliancePolicyRetentionLabel -All -ErrorAction Stop

# Initialize total text message counter
$totalTextMessages = 0

foreach ($policy in $dlmPolicies) {
    Write-Output "Processing policy: $($policy.DisplayName)"

    # Fetch retention data associated with the policy
    $retentionData = Get-MgCompliancePolicyRetentionEvent -PolicyId $policy.Id -All -ErrorAction Stop

    # Count messages managed by the policy
    $policyTextMessages = $retentionData | Where-Object { $_.ContentType -eq 'TextMessage' } | Measure-Object | Select-Object -ExpandProperty Count

    $totalTextMessages += $policyTextMessages
}

Write-Output "Total managed text messages: $totalTextMessages"
Disconnect-MgGraph

This script identifies DLM policies in your tenant, retrieves associated retention data, and tallies the count of managed text messages to help forecast potential billing changes.

HOW TO REMEDIATE SAFELY

If you find certain workloads are generating excessive text messages under DLM policies, consider these steps:

• Review Policies: Audit your retention labels and policies to ensure they target only necessary data.
• Adjust Retention Settings: Modify retention periods to align with current compliance requirements and reduce unnecessary data retention.
• Exclude Non-Compliant Data Sources: Update policies to exclude specific sources or types of data generating high volumes of messages.

The following script allows you to update a retention policy safely. Use -WhatIf to preview changes:

# Example: Update retention period for a policy
$policyId = ""

Set-MgCompliancePolicyRetentionLabel -Id $policyId -RetentionDays 365 -WhatIf

Always review policy changes before applying them to ensure compliance requirements are met.

PORTAL EQUIVALENT

The updated DLM settings and billing information can be accessed in the Microsoft Purview compliance portal:

• Navigate to Solutions > Data lifecycle management > Overview.
• View existing policies and their impact on managed text messages.

For detailed analytics, use the upcoming Retention Insights Dashboard when it becomes available (Q4 CY2026).

RECOMMENDATION

1. Audit your current DLM policies and managed data volumes to understand the impact of the new billing model.
2. Use the provided PowerShell script to calculate the number of text messages managed under DLM policies.
3. Evaluate whether your retention settings align with compliance needs and adjust them to minimize unnecessary costs.
4. Monitor upcoming feature releases, such as the Retention Insights Dashboard and new API endpoints, to enhance your reporting and management capabilities.

Proactively managing these changes will ensure a smooth transition to the new DLM billing model while maintaining compliance and cost-effectiveness.