Securing Microsoft 365 Copilot: Foundational Vs Optimized Licensing

Microsoft 365 Copilot can boost productivity, but with AI in the mix organizations must stay vigilant about security and compliance. Luckily, both Foundational and Optimized Copilot licensing tiers include safeguards to protect against data loss, insider risks, and oversharing. Let’s explore the key protections in each tier and how IT admins can use them to keep Copilot secure.

Foundational Tier – Core Security & Compliance
A foundational Copilot license (e.g. Copilot with Microsoft 365 E3) provides the core protections of Microsoft 365. Copilot “inherits the valuable security, compliance, and privacy policies” already in your tenant

In practice:

Access controls & encryption: Copilot honors existing permissions – users only see data they’re allowed to – and all content stays encrypted within your Microsoft 365 tenant. This prevents cross-user or cross-tenant data exposure.
DLP and labels: Your data loss prevention rules and sensitivity labels automatically apply to Copilot’s outputs. If an AI-generated email or document contains sensitive info (like a customer SSN), DLP can block that content. Likewise, anything marked “Confidential” remains labeled in any summary Copilot produces.
Audit logs & privacy: Copilot activities are recorded in audit logs for oversight Admins can review who asked Copilot what to spot improper queries. And because Copilot doesn’t use your data to train its AI models it inherently respects privacy and compliance requirements.

Bottom line: the base tier keeps Copilot governed by your existing security rules, reducing the risk of accidental leaks or oversharing.

Optimized Tier – Advanced Protection & Governance
The optimized tier (Microsoft 365 E5) unlocks more powerful security and compliance tools for Copilot, such as:

Insider risk detection: Microsoft Purview Insider Risk Management (in E5) uses machine learning to identify insider threats or data misuse. Alerting you if someone starts extracting large amounts of sensitive data via Copilot.
Communication compliance: Advanced policies automatically scan Copilot-generated emails, chats, etc. for sensitive data or policy violations. If an AI-crafted message breaks a rule, it can be flagged or blocked in real time. You can even monitor Copilot’s own prompts and responses for oversharing. for added protection.
Enhanced DLP & audit: E5 extends DLP to endpoints and increases audit log retention. You can prevent sensitive Copilot output from being saved to unapproved locations and keep detailed records of Copilot activity for longer, aiding compliance and investigations.

These features let you trust but verify Copilot’s actions through automated checks – an AI safety net catching issues the base tier might miss.

Secure and govern Microsoft 365 Copilot Licensing — Securing Microsoft 365 Copilot: Foundational vs Optimized Licensing 3

Practical Tips for Admins
To maximize security, admins should:

Tune policies: Update DLP rules and sensitivity labels to cover content Copilot might handle. Ensure they align with Copilot’s built-in Purview protections against oversharing.
Monitor usage: Regularly review Copilot audit logs and usage reports for unusual activity or requests, which helps catch issues early.
Educate users: Educate employees about Copilot’s proper use and data handling. Consider a phased rollout so you can adjust policies as needed before wider deployment.

By leveraging these tools and best practices, you can enjoy Copilot’s AI benefits without compromising security or compliance. Configured properly, Copilot acts as a smart collaborator that follows your rules—helping users work smarter while keeping data safe.