We had the same issue at our company for several years - we put up with it for a while but eventually raised it with microsoft.
To be fair, it take a fair bit of back-and-forth with microsoft to track the problem down, but turns out about 5 or 10 years back when the company was only a few people, one of the directors had played around with setting up a microsoft domain, didn't use it, stopped playing with it and then forgot about it. Didn't cause any issues until years down the track when suddenly we started getting errors like the above.
Once we established that MS worked with us to remove the domain from their systems, the errors went away, and I considered they were very helpful given the very small amount of money we spend on their services.
Microsoft's ID systems has been fucked for ages. They are either incapable of fixing it, or just don't give a damn.
About, oh, 8 years ago at a previous company, we signed up for and used AzureAD on a trial. It immediately broke our ability for staff to create a Microsoft account with our domain and a bunch of business processes that depended on those.
Our account rep at the time wasn't able to get us any help, and despite cancelling the trial the domain remained locked to Azure AD. Microsoft wasn't interested in fixing it, only signing us up for AzureAD and O365.