Downgrading of encrypted label (User defined permission) in SPO to Desktop app

Hello Manu2360,

Please refer to: https://learn.microsoft.com/en-us/purview/sensitivity-labels-sharepoint-onedrive-files#support-for-labels-configured-for-user-defined-permissions 

Guess the following might help in your case, 

• If users need to change labels configured for user-defined permissions, make sure you've enabled co-authoring for files encrypted with sensitivity labels.

Hope this helps!

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