Picture in picture mode issue in Microsoft launcher.

Since it works with your phone’s system launcher, this may be a launcher compatibility issue rather than a missing permission.

First, check Settings > Apps > Special app access > Picture-in-picture and allow it for the app playing the video. The exact menu varies by phone.

Then start a video in that app and return to the Home screen. If the floating video appears, picture-in-picture works—the greyed-out shortcut is the problem. Some manufacturers’ Recent Apps shortcuts or floating-window features only work fully with their own launcher.

Update Microsoft Launcher and the affected app, then restart the phone. If the shortcut still works only with the system launcher, there may not be a setting in Microsoft Launcher that can enable it. Report it through Launcher’s feedback option with your phone model, Android version, and a screenshot of the disabled icon. Use the system launcher temporarily if that shortcut is essential.