Microsoft 365 copilot data privacy

Copilot Data Protection

Microsoft 365 Copilot: Data Privacy & Security Commitments

As organisations accelerate their adoption of AI-powered productivity tools, data privacy and security remain paramount. Microsoft 365 Copilot is engineered to meet the highest enterprise-grade standards, ensuring customer data is protected by design and by contract.

This blog outlines the legal, technical, and compliance foundations that safeguard how Copilot operates inside Microsoft 365 environments, referencing Microsoft’s most recent commitments and certifications.

1. Data Residency and Processing

Data Stays Within Microsoft 365

All prompts, retrieved content, embeddings, and Copilot responses are processed exclusively within the Microsoft 365 environment, using Azure OpenAI infrastructure.
No prompts, documents, or responses are ever shared with public OpenAI services or external third parties.

No Data Used for Model Training

Customer data — including prompts, documents, chat history, and Copilot-generated responses — is never used to train large language models.
Enterprise data remains strictly segregated from foundation model training pipelines.

2. Enterprise-Grade Privacy and Security

Access Controls and DLP Enforcement

Copilot fully respects existing Microsoft 365 security frameworks, including:

  • Entra ID permissions
  • SharePoint/OneDrive access controls
  • Data Loss Prevention (DLP)
  • Sensitivity labels
  • Conditional access policies

Copilot only surfaces information the user already has permission to access.

Security by Design

Copilot follows Microsoft’s Secure Development Lifecycle (SDL), including:

  • Continuous threat modelling
  • Privacy impact assessments
  • Secure coding practices
  • Proactive vulnerability management

Security and privacy are integrated at every layer.

3. Contractual and Regulatory Safeguards

Microsoft’s Data Protection Addendum (DPA)

All Copilot data processing is governed by:

  • The Microsoft Data Protection Addendum (DPA)
  • The Product Terms
  • The Microsoft Privacy Statement

These legally binding documents define Microsoft’s responsibilities and data-handling obligations.

Microsoft provides legal defence for customers against third-party claims related to Copilot-generated content, provided that:

  • Safety systems are not disabled
  • Copilot output is not intentionally misused
  • Customers have rights to input data

This allows organisations to use Copilot with confidence.

4. Certified Compliance

Global Certifications

Microsoft 365 Copilot complies with international standards including:

  • SOC 2
  • ISO 42001 (AI Management System Standard)
  • GDPR

These are validated through independent audits.

EU Data Boundary Support

Copilot helps organisations meet EU data residency requirements by processing and storing data within the EU boundary for European customers.

5. Responsible AI and Safety Systems

Built on Microsoft’s Responsible AI Framework

Microsoft’s core Responsible AI principles guide Copilot’s design:

  • Fairness
  • Reliability & safety
  • Privacy & security
  • Inclusiveness
  • Transparency
  • Accountability

Includes:

  • Harmful content filtering
  • Sensitive data detection
  • Prompt injection defence mechanisms

No Retention of Prompts or Responses

Copilot does not store user prompts or conversations after the session ends.

6. Transparency and Documentation

Copilot Transparency Note

Microsoft provides a detailed Transparency Note explaining:

  • How LLMs integrate with Microsoft 365 apps
  • How data flows through the Copilot service
  • What protections govern data access

Audit Reports and Compliance Documentation

Customers can access SOC 2, ISO 42001, GDPR guidance, and more through the Microsoft Service Trust Portal.

📊 Additional Resources & Official Documentation

Category Resource Description
Privacy & Data Handling Microsoft 365 Copilot Privacy – Data Residency & Policy Settings How Copilot processes and stores data within Microsoft 365.
Data Protection Microsoft Data Protection Addendum (DPA) Contractual data protection obligations for Microsoft cloud services.
Safety Systems How Copilot Blocks Harmful Content Filtering and safety systems preventing harmful content.
Security Protections Prompt Injection & Jailbreak Protection Microsoft’s protections against jailbreak and injection attacks.
Contract Terms Microsoft Product Terms Licensing and service usage rules for Microsoft Online Services.
Glossary Microsoft Licensing Glossary Definitions for licensing and contractual terminology.
Copyright Protection Customer Copyright Commitment Microsoft’s legal defence commitment for Copilot users.
Responsible AI Transparency Transparency Note for Microsoft 365 Copilot Detailed insights into Copilot’s architecture and data handling.
SOC 2 SOC 2 Report – Microsoft 365 Central Services (Sept 2024) Independent audit of Microsoft 365 & Copilot controls.
ISO 42001 Certification Microsoft 365 – ISO 42001:2023 Certificate (2025–2028) Certification for AI governance and operational controls.
ISO Audit Report Microsoft 365 Copilot – ISO 42001 Audit Report (March 2025) Third-party audit confirming compliance.
GDPR Compliance GDPR & Generative AI – Customer Guide (May 2024) Guidance for GDPR-compliant use of Copilot.
DPA Summary Overview of Microsoft’s DPA Commitments Summary of contractual data protection terms.

Conclusion

Microsoft 365 Copilot empowers organisations with AI-driven productivity while maintaining enterprise-grade privacy, security, and compliance standards. With contractual assurances, technical safeguards, and global certifications, Microsoft ensures that Copilot is a trustworthy solution for organisations worldwide.



Written on August 10, 2025