FIDO2 passkeys block session token theft

Adversary-in-the-middle (AITM) attacks are increasingly bypassing traditional multi-factor authentication (MFA) by stealing session tokens, driving a shift toward FIDO2 and phishing-resistant passkeys in enterprise environments ^[1].

This transition comes as attackers move beyond password theft to manipulate the authentication process itself. While traditional MFA blocks many attacks, the emergence of proxy-based interception means that session tokens—the digital keys issued after a successful login—have become primary targets ^[1].

The rise of session token theft via AITM attacks

Attackers no longer need a password to take over a Microsoft 365 account; they only need a valid session token ^[1]. This is achieved through adversary-in-the-middle (AITM) attacks, which use a reverse proxy to sit between the user and the legitimate login page ^[1].

The proxy serves an exact copy of the sign-in experience, including organizational branding ^[1]. When the user enters their credentials and completes an MFA prompt, Microsoft issues a session token that the proxy captures and replays to access mail and files ^[1]. Microsoft telemetry shows a steady year-over-year increase in this activity ^[1].

How FIDO2 and passkeys neutralize phishing

FIDO2, an open standard developed by the FIDO Alliance, defeats AITM attacks at the protocol level ^[1]. Unlike traditional MFA codes, FIDO2 credentials are bound to specific domains ^[1][2]. A passkey registered for a legitimate domain will not respond to an authentication request from a proxy domain, meaning no session token is ever issued for the attacker to capture ^[1].

In Microsoft 365 environments, this is implemented through tools like Windows Hello for Business, which uses a device's Trusted Platform Module (TPM) chip to unlock a private key ^[1]. According to Sourcepass, FIDO2 and passkeys are available to every Microsoft 365 tenant, including those on free Entra ID ^[1].

Enterprise deployment strategies for high-value targets

Because risk levels vary across an organization, security experts recommend a phased rollout of FIDO2 ^[1]. Physical security keys, such as YubiKeys, are recommended for high-value targets including global admins, security admins, and executives ^[1]. These users are often the highest value impersonation targets and require the strongest protection ^[1].

For the broader workforce, device-bound passkeys in Microsoft Authenticator provide similar protection without the logistics of hardware distribution ^[1]. Research from HID and the FIDO Alliance indicates that 93% of organizations are now in some stage of passkey adoption ^[4].

The human cost of authentication friction

Despite the push for higher security, operational friction remains a critical vulnerability. A report titled "Frontline Friction: The State of Authentication for Frontline Workers," based on a survey of 700 decision-makers, found that 37% of frontline workers encounter authentication issues monthly ^[3].

These disruptions cost an organization with 2,800 frontline workers approximately 32,400 working hours annually ^[3]. According to the report, 95% of surveyed organizations have seen employees use risky workarounds, such as sharing credentials or staying logged in to avoid repeated prompts ^[3].

"When security controls don’t match the way people work, they unintentionally create incentives to bypass them," said Joel Burleson-Davis, Chief Technology & Security Officer at Imprivata ^[3]. This friction is particularly dangerous as 57% of these organizations reported suspected or confirmed AI-assisted attacks or deepfake impersonations in the last year ^[3].

The future of the FIDO standard and agentic AI

The FIDO ecosystem continues to expand into new hardware and software categories. BIO-key International's Passkey:YOU authenticator is FIDO Alliance certified ^[6].

The FIDO Alliance is also expanding its focus to digital credentials and authentication for AI agents ^[8]. The organization has established the Digital Credentials Working Group to improve interoperability and adoption of digital credentials, as well as Agentic Authentication and Payments working groups to explore how to verify an AI agent's authority and link its actions to an authenticated individual ^[8].

What we don't know

• What are the specific technical results and proposed standards from the FIDO Alliance's agentic AI authentication working groups?
• What are the exact cost differences for enterprises when implementing physical security keys for executives compared to device-bound passkeys?
• How many organizations have successfully migrated from traditional MFA to FIDO2 across their entire workforce rather than in phases?