Claude Comes to Microsoft 365 Copilot - and Brings Big Data Governance Questions

Claude is coming to Microsoft 365 Copilot (via Researcher) and Copilot Studio is big news. My preference right now is for Claude 4 over GPT 5 in terms of response quality, so being given this option is huge.

But I do have questions.

This is an opt-in feature. Unless an admin for your organization turns this on, none of your requests go through Claude. However, all administrators MUST understand that this option is not simply a technical one, it is a significant data governance decision-point too.

Up until now all AI models available directly through Microsoft 365 Copilot and Copilot Studio have been hosted by Microsoft in Azure. Your data being processed never leaves Microsoft's care, and all that processing occurs under the agreements you have in place with Microsoft.

This is different.

Microsoft isn't hosting Claude in Azure. If you choose to enable Claude access, then your data is going to Anthropic.

Microsoft's agreements do not cover that use. They will fall under Anthropic's commercial terms of service. Microsoft has put together a very light explainer on this (linked in the comments), that I'm pretty sure many governance or legal pros will still have a lot of questions after reading.

There are some basics that aren't clear. For example, how do I enforce my rights under Anthropic's terms if everything I do with them is transacted via Microsoft? Does Microsoft provide Anthropic information so they can segment my data from another Microsoft client's on their servers? Is this relevant in terms of legal compliance, court orders etc?

When initially hearing of the potential of this exciting update, I imagined there would be no way Microsoft would deploy models into the core of its Copilot services that aren't hosted on Azure. I was very wrong. But I said that because I could foresee that any other solution would create a whole bunch of complex data compliance questions. Those questions have now arrived, and I'm not seeing as many answers as I would like at this early stage.

I would love to learn what those with data governance or legal expertise are thinking of this change. I doubt there are many who are eager for their admin to turn on this option just yet.

As for my perspective, I'm sure these questions will be resolved. As a technology upgrade the addition of Claude to Copilot Studio and Researcher is fantastic, and I hope options to use it across all of Microsoft 365 Copilot arrive soon.

First posted on Linkedin on 10/02/2025 -> View Linkedin post here