The Placeholder Trap: Why Your Backblaze Backup Is Missing Hundreds of Gigabytes

TL;DR Backblaze no longer backs up OneDrive and Dropbox folders in their default configurations because Microsoft and Dropbox replaced real files with cloud placeholders starting in 2017, a shift that now affects an estimated 60-90% of content in those directories for its 850,000 customers backing up 2.1 million computers. The company made the change quietly through client updates rather than customer alerts, creating a gap between what users assume is protected and what actually gets backed up.

• OneDrive’s Files On-Demand became default in Windows 1709 (October 2017), turning folders into namespaces of zero-byte stubs that return errors to backup software.
• Sync services offer only 30-day deletion recovery while Backblaze provides one-year retention, yet the local client cannot see what isn’t fully downloaded.
• Users must now choose between forcing full local hydration (consuming massive SSD space) or adding separate cloud-to-cloud tools.

When Backblaze launched in 2008 it sold a beautifully simple idea: install our software and every file on your computer would be copied to the cloud forever, no exceptions. Seventeen years later that promise collides with a reality created by Microsoft and Dropbox. In October 2017 Microsoft made Files On-Demand the default setting for Windows, meaning most consumer OneDrive folders now contain mostly placeholder files instead of real data. The result is that hundreds of gigabytes many users believe are safely backed up by traditional services simply aren’t there when restoration time comes.

How 2017’s Files On-Demand Created a Backup Blind Spot

Microsoft’s decision to enable Files On-Demand by default in Windows 10 version 1709 fundamentally changed what “local files” means. Instead of downloading every file, the OS creates lightweight reparse points that act as pointers to the cloud. Independent tests show these placeholders can represent 60-90% of files in a typical consumer OneDrive or Dropbox folder. [1] Backblaze responded by updating its client from version 8.0 onward to detect mount points and cache directories for OneDrive, Dropbox, Google Drive, Box and iDrive, automatically excluding them to prevent endless scanning loops and excessive bandwidth charges. [2] With 850,000 paying customers and 2.1 million computers being backed up as of Q3 2024, the company made a pragmatic engineering choice. [3] Yet the exclusion logic operates partly at the filter-driver level and does not always appear in the visible exclusions list, so users who set up the software years ago never saw the change. This evolution happened gradually between 2018 and 2023 through knowledge-base edits rather than any loud announcement or in-app banner. [2]

Why Traditional Scanners Cannot Read Cloud Placeholders

The technical problem is straightforward: when a backup client tries to open a placeholder file, Windows returns ERROR_CLOUD_FILE_NOT_IN_SYNC and the sync client begins downloading the real data. [1] For a 383 GB OneDrive folder this would mean terabytes of unnecessary traffic and hours of thrashing. Backblaze chose to skip these folders entirely rather than hammer the sync providers’ APIs or force full hydration. [2] This approach differs sharply from cloud-to-cloud tools like rclone or MultCloud that authenticate directly against OneDrive and Dropbox APIs, bypassing the local filesystem problem at the cost of slower initial scans and additional monthly fees. Snapshot tools such as Macrium Reflect run into identical limitations because they also rely on the same NTFS reparse points. The Backblaze UI still claims to back up “all file types” while its release notes quietly added the new exclusion policy under the heading “Improvements.” [4] Large .git repositories are not formally excluded but can appear stuck because thousands of tiny objects trigger performance throttling, creating further confusion for developers.

What a Reliable Backup Strategy Looks Like in 2025

The practical consequence is that anyone who moved their Documents, Desktop or project folders into OneDrive under the assumption of seamless Backblaze protection has been operating with a false sense of security. [5] Real restores attempted in late 2024 and early 2025 revealed the gap for long-time users who had relied on the service since 2015. For the 1 billion monthly OneDrive users and 700 million Dropbox accounts, the fix requires deliberate action: either right-clicking critical folders and selecting “Always keep on this device” (which can consume hundreds of gigabytes of local SSD) or running a separate cloud-to-cloud backup that treats OneDrive itself as the source of truth. Backup purists have long warned that sync is not backup because account suspension or ransomware can wipe both copies simultaneously. The industry has not yet solved the communication problem; release notes buried in changelogs do not reach most of Backblaze’s customer base. The remaining obstacle is complexity: every additional layer added to close the gap moves further from the original “set and forget” promise that made these services popular.

The core tension remains whether backup vendors should expend engineering effort to work around sync-client design decisions or whether Microsoft and Dropbox should provide a clearer local-first mode for users who need real backups. In the meantime, the question every power user must answer is simple: when was the last time you actually tested a restore from the folders you care about most? The answer may be more uncomfortable than expected.

References

[1] Microsoft Docs - Files On-Demand - https://learn.microsoft.com/en-us/onedrive/files-on-demand

[2] Backblaze Knowledge Base - What Does Backblaze Back Up? - https://www.backblaze.com/help/what-does-backblaze-back-up

[3] Backblaze Q3 2024 Shareholder Letter - https://www.backblaze.com/company/investor-relations

[4] Backblaze Client Release Notes 8.0+ - https://www.backblaze.com/company/release-notes

[5] Seed Article by Robert Reese - https://rareese.com/posts/backblaze/

[6] Grand View Research - Cloud Backup Market Report 2024 - https://www.grandviewresearch.com/industry-analysis/cloud-backup-market