Microsoft Copilot and GDPR at Work

This isn't legal advice, just the operator's perspective I use to check AI tools for my own business in Germany, so everything here is about the GDPR and the EU. With Microsoft Copilot, GDPR compliance doesn't depend on the product name, it depends on the account you sign in with. With a work account (Microsoft Entra), Microsoft says Microsoft Copilot and Copilot Chat are covered by its Data Protection Addendum (DPA) and the Product Terms: Microsoft acts as your processor, prompts and responses don't train foundation models, and the EU Data Boundary applies, with two exceptions, web search through Bing and the Anthropic models. With a personal Microsoft account, the Microsoft Services Agreement and the privacy statement apply instead. Microsoft ties its DPA to the Product Terms for business products, so there's no data processing agreement for personal accounts, and it's the wrong route for client data.

I use Microsoft 365 for email and calendar but don't run Copilot myself; my business data goes through Claude Team. Everything here comes from Microsoft's own documentation (Microsoft Learn, consumer support pages, privacy statement, DPA of May 2026), retrieved on 28 October 2026. More basics on AI at work are collected on my AI Basics page.

Which Copilot? Four products, two rulebooks

Microsoft has renamed its business products: "Microsoft 365 Copilot is now named Microsoft Copilot, and Microsoft 365 Copilot Chat is now named Microsoft Copilot Chat." During the transition, Microsoft says licences and interfaces may still show the old names, and the renaming changes nothing about security, compliance and privacy. The business product now shares its name with the consumer Copilot app, so the name alone no longer tells you which one you're using.

The account tells them apart. Copilot Chat also shows a green shield next to the New Chat button when enterprise data protection applies, according to Microsoft. No shield? Check which account you're signed in with.

GitHub Copilot has its own terms and isn't covered here; see Claude vs Copilot for Coding: Which One?.

Copilot and GDPR with a work account: what Microsoft commits to

Role. Microsoft states that organisational use of Copilot and Copilot Chat is covered by the DPA and the Product Terms, "with Microsoft acting as a data processor". The DPA makes the customer the controller and Microsoft the processor, with transfers out of the EU on the 2021 Standard Contractual Clauses.

Training. The key commitment reads: "Prompts, responses, and data accessed through Microsoft Graph aren't used to train foundation LLMs". The same applies to prompts and responses in Copilot Chat. Optional feedback may be used to improve the product, but not to train the foundation models, and admins can manage it centrally.

Storage. Prompts and responses are kept as activity history under the same commitments as your other Microsoft 365 content; Copilot Chat logs them in Exchange for auditing and eDiscovery. Admins set retention in Purview, users can delete their history in the My Account portal.

Access. The point many underestimate: licensed Copilot uses Microsoft Graph to reach emails, chats, calendars and files, everything the person may at least view. Microsoft itself stresses setting permissions in SharePoint and elsewhere so the right people reach the right content. A folder shared with "everyone" years ago is visible to Copilot. Copilot Chat without a licence mainly works with the web and what you upload; in Outlook it also reaches mailbox, calendar and a limited set of files.

EU Data Boundary: it applies, with two exceptions

Microsoft describes the EU Data Boundary as a geographic boundary within which it stores and processes customer and personal data for its enterprise online services, with limited exceptions. For Copilot it says: "For EU customers, Microsoft Copilot is an EU Data Boundary service." Microsoft names two exceptions explicitly.

First, web search. For web search, Copilot turns your prompt into a short query and sends it to Bing without user or tenant identifiers. For these queries, though, Microsoft isn't your processor but, in its own words, "an independent data controller", and the EU Data Boundary doesn't apply to them. Whether web search runs depends on your organisation's privacy settings; check with your admin.

Second, the Anthropic models. Copilot can run on Anthropic's Claude instead of the OpenAI models. Microsoft says these models are currently excluded from the EU Data Boundary and off by default in the EU, EFTA and the UK until an admin enables them. Since 3 April 2026, a setting lets Anthropic become the default model for Copilot in the Microsoft 365 apps in the EU. A third tier is "Anthropic models with Data Retention": for these, Microsoft says its own DPA doesn't apply, Anthropic's terms do, and Anthropic stores most inputs and outputs for up to 30 days. These models stay off everywhere until an admin explicitly allows them.

If you're introducing Copilot because of the data boundary, decide on the models at the same time. How Copilot and Claude compare for office work overall is in Copilot vs Claude: What Works at the Office.

Personal Microsoft account: the consumer app

A new version of the Copilot app has been out since 18 August 2026. Its privacy page applies when you sign in with a personal Microsoft account and points to the Microsoft Services Agreement, the Copilot Terms of Use and the privacy statement. The privacy statement says: "Microsoft Copilot also uses prompts and related data to provide and improve services, including relevant advertising." You can control memory, chat history, web search and personalised ads. On training, Microsoft's general privacy statement says it may use your data to develop, train and fine-tune its own AI models, including LLMs. I couldn't find a Copilot-specific statement or a training opt-out on the pages for the new app. The older FAQ with an opt-out from training now only applies to the old app version, according to Microsoft.

So client data doesn't belong in the personal Copilot app, whatever the toggles say, because no data processing agreement stands behind it. The same goes for Copilot in Microsoft 365 Personal or Family, even though Microsoft rules out training there. The risk usually comes from employees who get things done faster with their personal account, not from a company decision. What you can do about that is in Shadow AI: When Your Team Uses AI in Secret. A written rule for it belongs in your AI policy, see AI Usage Policy for Small Teams.

Checklist: Copilot at work in seven steps

1. Pick the product and the account. For business data, only Copilot or Copilot Chat with a work account. Rule out personal accounts for business data in writing.
2. Check the shield. In Copilot Chat, the green shield shows that enterprise data protection applies. Show your team a screenshot of it.
3. File the contract. Download the current version of the DPA, note the date and add Microsoft as a processor to your record of processing activities. Whether you need a data protection impact assessment is a question for your data protection officer. As a starting point for the compliance review, Microsoft offers a "Microsoft Copilot & Copilot Chat Risk Assessment Quickstart".
4. Clean up permissions before the licences arrive. Review old shares in SharePoint, OneDrive and Teams and restrict confidential folders.
5. Decide on the models. Anthropic models stay off in the EU until you decide otherwise. Only allow "Anthropic models with Data Retention" after reviewing Anthropic's terms yourself. The same goes for third-party agents: Microsoft says their own privacy statement and terms of use apply.
6. Decide on web search. Bing queries fall outside the processor role and the EU Data Boundary. Decide whether you want that.
7. Set retention. Set how long Copilot history is kept in Purview rather than relying on defaults.

Which data belongs in an AI chat at all is covered in AI and Privacy: What the AI Gets to See. For health data and other specially protected data, a local model is often the better route, see Local AI and Privacy: Cloud or Server?

Frequently asked questions

Is Microsoft Copilot GDPR compliant?

There's no blanket answer, and this isn't legal advice. Microsoft says Copilot meets its commitments to business customers, explicitly including the GDPR and the EU Data Boundary. Whether your use is lawful depends on your account, data, purpose and settings.

Does Microsoft use my Copilot data for training?

With a work account or in Microsoft 365 Personal and Family, Microsoft says no. For the personal Copilot app, the privacy statement lists improving services and advertising and generally reserves the right to use data to train its own AI models; Microsoft only describes an opt-out for the old app version.

Is Copilot Chat free and still protected?

According to Microsoft, Copilot Chat and its enterprise data protection come with eligible Microsoft 365 licences at no extra cost, as long as you sign in with your work account. The green shield tells you it applies.

Does my data stay in the EU with Copilot?

For EU customers, Microsoft says Copilot is an EU Data Boundary service. Web search queries to Bing and the Anthropic models are excluded, along with the limited exceptions Microsoft documents for all its services.

Do I need a data processing agreement for Copilot?

With a work account, Microsoft's DPA applies and makes Microsoft your processor; keep the current version with your records. The personal Copilot app has no equivalent, so personal client data doesn't belong there.

What to do next

Start with steps 1 and 2: find out who uses which account, and show everyone the green shield. Permissions and models come next, before the first licence. If you have a works council, bring it in early, see AI and the Works Council in Germany. If you want to use Copilot or another AI for contracts, read AI Contract Review: What Works first. How others set up their AI tools with privacy in mind is what we discuss in my German-speaking community Claude Practitioners.