We recently deployed AIP at a client with Office 365 Business Premium. We created a couple of custom labels and added them to the default policy. The users are properly licensed. Everything worked well then about a week ago they started receiving the error "Azure Information Protection cannot apply this label because you don't have permission to perform this action. You can request that this document owner grants you the required rights."
The error occurs when the user tries to label any content, even using the default Public label. This issue affects all users in the tenant.
Microsoft Premier support has reported that there is a known issue, but hasn't been able to provide documentation yet.
I'm wondering if anyone else has seen this or has any guidance about the error.