Microsoft Loop Workspaces not available for some M365 E5 users

Hi Tom,

My name is Jason and I am an ondependent advisor and windows user like yourself.

This is a very specific and frustrating issue, and the "diamond" icon pointing to an inappropriate plan is the key piece of evidence. Since you are using Microsoft 365 E5 (which should grant all Loop features) and have a split user experience, the issue is almost certainly due to one of three things:

1. Missing "Extra Features" License (Most Likely)

Conflicting or Targeted Cloud Policy (Common Admin Issue)

The Licensing Structure for Loop Workspaces (The "M365" vs. "O365" distinction)

Here is the breakdown of why this happens and what steps your M365 Admin needs to take.

1. The Critical "Extra Features" License (The Free Fix)

When Loop moved from Public Preview to General Availability (GA), Microsoft introduced a separate, zero-cost service plan for users who already had specific licenses like M365 E5. It's often called the "Extra Features" license or similar.

The official Microsoft documentation states that users with certain licenses (like M365 E5) who were "early adopters" may need to have this supplemental license manually enabled for them to access advanced Loop features like workspace creation.

Action for Your Admin:

Go to the Microsoft 365 Admin Center.

Navigate to Billing > Licenses.

Search for a free supplemental license that might be required for Loop.

If found, ensure it is assigned to the users who are currently blocked.

If not found, go to Billing > Purchase services and look for a free "Loop App" or "Microsoft 365 Extra Features" license to add to your tenant, then assign it.

If this free license wasn't automatically assigned to all users after the GA date, it explains why some users have it (maybe they were early adopters who got it automatically) and others don't.

2. Targeted Cloud Policy Conflict

You mentioned that no "targeted release has been configured," but the issue could be with a Cloud Policy that is restricting access. Since the issue is inconsistent across users with the same license, the most common culprit is a policy that applies to all users but has an unintended exception.

The "Create Loop Workspaces in Loop" feature can be controlled via Cloud Policy in the Microsoft 365 Apps admin center.

Action for Your Admin:

Go to the Microsoft 365 Apps Admin Center (via the M365 Admin Center).

Navigate to Customization > Policy Management.

Check existing policies for any setting related to "Loop" or "SharePoint Embedded".

Specifically, look at the policy for "Create Loop workspaces in Loop":

If there is a policy that sets this to Disabled for "All users", but an older, higher-priority policy was set to Enabled for a specific security group (the users who can create workspaces), you have a conflict. The users who can't create workspaces are correctly hitting the global "Disabled" rule.

The Fix: Ensure the relevant Loop policies are either "Not Configured" (to allow license defaults) or explicitly "Enabled" and targeted correctly to the affected user group.

3. The License Type (M365 E5 vs. O365 E5)

You correctly noted you are using Microsoft 365 E5, which is crucial.

The official requirement for creating Loop Workspaces is a Microsoft 365 E3, E5 (or Business Standard/Premium) plan.

Office 365 E3/E5 plans do not include the Loop Workspace creation feature (they only allow users to view/edit components created elsewhere).

Since you have M365 E5, the license itself is sufficient. However, the system's internal check might be getting confused by the unbundled Teams EEA license structure, which is a recent complication due to European regulations.

Final Diagnosis and Resolution:

Given the symptoms (E5 license, "diamond" icon, inconsistent access), the problem is almost certainly one of the following:

Priority 1: Missing Extra Features License. This is a common hiccup when Microsoft releases a new GA feature. The Admin must find and assign the free supplemental license to the affected users.

Priority 2: Cloud Policy is incorrectly restricting access. The Cloud Policy is overriding the E5 license.

If the Admin has confirmed the licenses and checked all policies without success, the final step is to open a support ticket with Microsoft. The fact that you have the EEA licenses (M365 E5 No Teams + Teams EEA) combined with the user-by-user inconsistency suggests an internal provisioning error that only Microsoft's backend team can resolve.