Please see Veeam KB3146 for limitations that come with Modern Authentication. Only enable Legacy Protocols with Modern Authentication or even go down to Basic Authentication if you really need one of the features which are today not available via Microsoft’s Graph API (and thus not with Modern App-Only authentication). While this was already postponed some times and might be again, it is not good to rely on Basic Auth anymore. Microsoft announced to disable Basic Authentication beginning from October 1, 2022. Use Modern App-only Authentication which gives you the best performance, most security and is most future proof. This section has content in regards of authentication of VBO against the Microsoft 365 infrastructure.