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Apple Business accounts can't use automatic signing.
Managed Apple IDs don't support App Specific Passwords nor Sign in with Apple, so 2FA is always delivered via SMS.
SMS isn't supported for automatic signing, as per:

From a customer standpoint, I spent a fair bit of time getting this set-up to find our only options are:
- manually sign every new user for testing;
- re-create all of our certs on a new Apple ID outside of the company domain for Distribution; or
- use TestFlight.
Seems like a pretty big deal to leave this out. Would've saved a lot of time if this was clear in the docs to start with.
Document Details
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- ID: 5a807b36-339c-dd76-a6bb-132005991516
- Version Independent ID: 8ffb33e3-09fd-fe41-742f-a9f4d11bf901
- Content: Manage App Center Distribution Groups - Visual Studio App Center
- Content Source: docs/distribution/groups.md
- Service: vs-appcenter
- Sub-service: app-center-distribute
- GitHub Login: @lucen-ms
- Microsoft Alias: lucen