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Microsoft Expands Copilot DLP Controls to Local and Cloud Files

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Summary

Microsoft says Purview DLP will block Copilot from processing sensitivity-labeled Office files across local and cloud storage. The rollout is scheduled for late March through late April 2026; the announcement follows a Copilot Chat bug involving confidential emails.

Key points

  • Purview DLP will block Copilot from processing sensitivity-labeled Word, Excel, and PowerPoint files regardless of storage location.
  • Previously, the described enforcement applied to files in SharePoint and OneDrive, not locally stored files.
  • Microsoft scheduled deployment through the Augmentation Loop Office component for late March through late April 2026.
  • The change is set to be enabled automatically for organizations whose DLP policies block Copilot from processing sensitivity-labeled content.
  • Microsoft says Office clients will provide file sensitivity labels directly to AugLoop, extending enforcement to local files.
  • The update follows a Copilot Chat bug that allowed confidential emails in Sent Items and Drafts to be summarized despite DLP policies; Microsoft said the information was accessible only to users already authorized to see it.

Article Details

Event Type
Microsoft expanded Microsoft Purview DLP controls for Microsoft 365 Copilot and reported a Copilot Chat bug that allowed confidential emails to be summarized despite active DLP policies.
Impact
The update is intended to block Copilot from processing DLP-restricted, sensitivity-labeled Word, Excel, and PowerPoint files across local, SharePoint, and OneDrive storage. Before the change, enforcement covered only SharePoint and OneDrive files. The separate bug allowed Copilot Chat to read and summarize confidential Sent Items and Drafts emails for nearly a month; Microsoft said access to the summaries was limited to people already authorized to see the information.

Vendors

MicrosoftMicrosoft is expanding Purview data loss prevention controls so Microsoft 365 Copilot cannot process confidential Word, Excel, and PowerPoint documents regardless of where they are stored.

Products

Copilot ChatMarch and late April 2026 and is being auto-enabled for organizations with DLP policies, following a Copilot Chat bug that briefly allowed summarization of confidential Sent Items and Drafts.Microsoft 365 CopilotMicrosoft is expanding Purview data loss prevention controls so Microsoft 365 Copilot cannot process confidential Word, Excel, and PowerPoint documents regardless of where they are stored.Microsoft Purview DLPCurrently, Microsoft Purview DLP policies apply only to files stored in SharePoint or OneDrive, but not to those stored on local devices.

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