The issue has been resolved following the changes applied by Microsoft on the Azure IoT Hub platform. Assets have reconnected and status reporting is back to normal. You can now re-add the Connectivity check to your Base Server policy (or equivalent). Appreciate your patience and a post incident report will follow in the coming days.

Microsoft support engineers have applied changes on the Azure IoT Hub side, and assets are beginning to recover. We're monitoring as connectivity restores across the fleet. If you applied the Connectivity check workaround, please hold off on reverting until we confirm full recovery. A final update will follow.

We are now actively engaged with a Microsoft support engineer who is investigating the issue on the Azure IoT Hub platform. We'll continue to share progress as we receive it.
Workaround: To reduce alert fatigue, we recommend temporarily removing the Connectivity check from your Base Server policy (or equivalent) until the issue is resolved. Please note that affected assets will need to come online long enough for the policy change to be distributed, which may be intermittent given the current connectivity issues.
We are also investigating options to suppress these false positive Connectivity alerts globally on our side.
Further updates to follow.

The connectivity issue has been traced to a throttling error on the Azure IoT Hub platform. A support case has been raised with Microsoft Azure.
Workaround: To reduce alert fatigue, we recommend temporarily removing the Connectivity check from your Base Server policy (or equivalent) until this is resolved. Updates to follow.

We are currently investigating an outage affecting our IoT Hub, which has caused a number of assets to disconnect and is resulting in inaccurate offline status reporting across the platform. Underlying device functionality is not impacted. Updates to follow.