‘All-day’ Events become 24-hour Events when synced with Lightning Sync and Einstein Activity Capture using EWS on the Microsoft side

The behavior seen above is working as designed for Lightning Sync/EAC using Microsoft's EWS API.

For an all-day Event created in Salesforce or Google/Outlook calendar having bi-directional sync, an all-day Event will be created on the counterpart system; however, upon full synchronization, the event in Salesforce will become a 24-hour event. The logic is designed in such a way due to the various email clients Exchange can communicate with. There are different properties that come with these events, and how each mail client treats all-day Events. In order to provide a consistent User experience, we treat these events as 24-hour Events.

As a result, the 'All-Day Event' checkbox will be removed from Salesforce Event's record, and the Start & End time will change to a 24 hour time span (12:00 AM of the date of the event, until 12:00 AM of the following day).

After the Spring '26 release the behavior is different if Einstein Activity Capture is migrated to use Graph instead of the legacy Microsoft EWS.  Here the behavior is that Graph and Salesforce now use the Midnight-Midnight, in UTC, block and a pass the All-Day event flag which allows Salesforce to show this on event records.

See also:
Lightning Sync

How Your Events Sync with Lightning Sync

Migrate Microsoft 365 Authentication in Einstein Activity Capture to Microsoft Graph

Events and Einstein Activity Capture