AI agent attack on Microsoft 365 through a backup app: what Microsoft found and what to check

On 21 October 2026 Microsoft reported that a China state-aligned hacking group used an AI agent tool called ARTEX to attack Microsoft 365 accounts at machine speed. The group got in through a backup app that IT companies connect to their clients' Microsoft 365, so it needed nobody's password. For an Indian business on Microsoft 365, the lesson is about the outside apps you have let into your email and files. It follows Microsoft's report, ConnectWise's advisory and Microsoft's help page, read on 22 October 2026.

What happened: an AI agent tool broke in through a trusted backup app

• The group and the tool. Microsoft Threat Intelligence says a China state-aligned group it calls Storm-0940 has used ARTEX since as early as September 2026 to automate attacks on hundreds of organisations. Microsoft describes ARTEX as an open-source set of AI agents that can run an attack "from reconnaissance through data exfiltration with little needed human interaction", using any AI model.
• The way in. The group took over app identities of ConnectWise Cloud Backup (formerly SkyKick), a backup service connected to Microsoft 365. Because those apps already had permission, the group could work "without requiring an interactive user sign-in." Microsoft says the group then tried to sign in to more than 2,250 tenants (Microsoft 365 accounts of organisations) at 2,900 sign-in attempts a minute.
• The speed. In several cases, Microsoft says, the time from first targeting to privileged access in the cloud was less than 3 hours.
• Inside. In some accounts the AI agents went on to look around, change app credentials and try to raise their privileges. Microsoft adds that an affected app or a successful sign-in "does not necessarily indicate that customer data was accessed or exfiltrated", and that its own systems were not compromised.
• ConnectWise's response. ConnectWise published its advisory on 16 October 2026, disabled seven app identities on 17 October 2026 and suspended the service. On 22 October 2026 it said restoration is going on in phases. It also warns that its steps do not remove access the attackers may already have set up inside each customer's account.

What is not known: how the attackers first got the app credentials (ConnectWise is still investigating), how many organisations were actually breached, and whether any are in India.

Why it matters for a small business

If an IT company manages your Microsoft 365, it may have connected extra tools for backup, security or licences. Each such app holds a permission that works without anyone's password, day and night. When one of those tools is taken over, every client account it reaches can be exposed.

AI changes the speed. Microsoft writes that AI agents "can work around the clock, on weekends, and on holidays and attempt multiple breach paths simultaneously." That leaves very little time to react after an alert, so the checks have to happen before.

Who should care

• Businesses whose email and files are on Microsoft 365, especially if an IT company manages it
• IT partners and service providers who use ConnectWise or SkyKick tools for their clients
• Anyone who has clicked "Accept" when an app asked for access to their work account
• Businesses in sectors Microsoft names among the targets, such as manufacturing, legal, financial services and technology

What changes for you

What to check in your Microsoft 365 this week

1. Ask your IT partner in writing. Send this:

Hello, Microsoft and ConnectWise have reported attacks through ConnectWise Cloud Backup (formerly SkyKick) apps in Microsoft 365. Please confirm in writing:

1. Whether any ConnectWise or SkyKick app is, or ever was, connected to our Microsoft 365.
2. If yes, whether our account has been reviewed with Microsoft's and ConnectWise's guidance, and what was found.
3. Which other outside apps have access to our email and files, and which of them we still need.

Thank you.

2. See which apps have access. An administrator can sign in to the Microsoft Entra admin center, go to Entra ID, then Enterprise apps, then All applications, open an app and select Permissions. Microsoft's help page says this needs a role such as Cloud Application Administrator.
3. Cut access you do not need. Microsoft recommends giving such apps only the permissions they need. Agree each change with your IT partner. For a ConnectWise app, disable it and keep the records, as Microsoft and ConnectWise advise.
4. Look for quiet changes in email. Microsoft lists mail forwarding, inbox rules and delegated mailbox permissions among the things to review. Ask your admin to check for forwarding nobody set up.
5. Protect admin accounts. Before the backup app was misused, Microsoft saw the same group try a password-spray attack (many common passwords against many accounts): more than 151,000 failed sign-ins, none successful. Long, separate passwords and two-step sign-in on every admin account help here. This step is our advice, not Microsoft's.

Then make a rule that nobody connects a new app to company email or files without asking: our guide on simple AI rules for your team shows how to write it. Before adding any new tool, ask the questions in our guide on what to check before you pay for an AI tool, such as who will own it.

What to watch next

• ConnectWise's reconnection instructions. It asks customers to keep the affected connections disabled until it gives formal instructions, and expects restoration to take several days.
• More attackers using the same tool. Microsoft says threat actors in several regions now use ARTEX.
• How the first credentials were stolen. The answer will show whether other tools that IT companies connect to Microsoft 365 face the same risk.

Not sure where AI can help your business safely? The free AI Business Checkup takes about three minutes.