Primary DC in Azure

Question

We have a small client with very few users and only 1 domain controller. They currently use Office 365 for all services (email, SharePoint, OneDrive, etc.) They would like to get completely rid of their DC, and have zero footprint.
With Windows 8.1, you can use Windows Live Accounts to sign in to Windows, does anyone know if this functionality will ever extend to Office 365/Azure accounts? If so, this would be the solution.
If not, has anyone ever build a DC in Azure, migrated the FSMO roles, then used it as the ONLY DC in the infrastructure. I'm reading that a site to site VPN to the Azure Network would be required, for client authentication, but I want to confirm this solution
before moving forward. Thank you.

Answer 1

Regarding your first question, last year we announced that Windows 10 would be able to leverage Azure Active Directory in this way:
http://blogs.windows.com/business/2014/11/07/windows-10-manageability-choices/
[...] With Windows 10 we’ll also add the ability to leverage Azure Active Directory, devices can be connected to Azure AD, and users can login to Windows with Azure AD accounts or add their Azure ID to gain access to business apps and resources.
At the same time, we’ll ensure that Windows works better when using Active Directory and Azure Active Directory together. When connecting the two, users can automatically be signed-in to cloud-based services like Office 365, Microsoft Intune, and the Windows
Store, even when logging in to their machine using Active Directory accounts. [...]
Regarding building the DC in Azure, I can't say I've done this myself, so others may have better guidance. My first concern would be that the site-to-site VPN (which you do require) would need to be quite hardy if it's the *only* DC. Have you had a chance
to look at these resources?
Guidelines for Deploying Windows Server Active Directory on Azure Virtual Machines
Install a replica Active Directory domain controller in an Azure virtual network