Microsoft Extends DLP Policy for Copilot Protection to All Storage Locations

Microsoft has enhanced the DLP policy for Copilot to cover Office files held in any storage location instead of only Microsoft 365 locations like SharePoint Online and OneDrive for Business. The change is made in the Office augmentation loop, a little-known internal component that coordinates use of connected experiences by apps. Extending the DLP policy to cover all locations makes perfect sense.

https://office365itpros.com/2026/02/24/dlp-policy-for-copilot-storage/