Advanced DLP Conditions overriding the selected locations

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Occasional Visitor

Hey all, we have a DLP policy that is applying to exchange when we have the exchange location turned off. The only condition that looks to be making this apply to exchange is "content is shared from Microsoft 365 with people outside my organization". Is this intended behavior of the product? Microsoft support said that this is how DLP should work, but this logic seems contradictory. 

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