Microsoft's solution for external identities. It includes B2B collaboration (inviting partners as guest users in your tenant) and customer identity and access management (CIAM) in an external tenant, with self-service sign-up, social sign-in (Google, Facebook, Apple) and customizable user flows. It succeeds Azure AD B2C, which has not been sold to new customers since May 2025.
In AZ-900 it appears as "external identities". In AZ-305 it is a key design decision: partners or employees of another company → B2B (guests in your tenant); customers or consumers of your application → External ID with an external tenant. Question: an application with millions of customers signing in with social accounts → Microsoft Entra External ID.
Microsoft Entra External ID is a concept that can show up on the exam. Check the full guide to see it in context.