Microsoft to enable in-country Copilot data processing by 2026

Microsoft will provide in-country data processing for Microsoft 365 Copilot interactions in 15 countries over the next two years, in a move aimed at enhancing local control and regulatory compliance for customers in government and highly regulated industries.

Geographic availability

By the end of 2025, customers in Australia, the United Kingdom, India, and Japan will have the option of processing their Copilot interactions-such as prompts and responses handled by large language models-within national borders. In 2026, this capability will be extended to Canada, Germany, Italy, Malaysia, Poland, South Africa, Spain, Sweden, Switzerland and the United Arab Emirates.

Data controls

Microsoft's decision is designed to offer an extra layer of governance by giving customers the opportunity to process Copilot interactions in data centres located inside their country. This approach may help customers meet national requirements on data security, sovereignty, and regulatory standards. The company said this local processing can also improve performance by reducing latency.

Regulatory requirements

Many governments and institutions in highly regulated sectors face strict rules on data handling, particularly regarding the physical location of their information. In-country data processing allows these organisations to address compliance issues more effectively and apply national policies to their use of AI tools.

Existing infrastructure

Microsoft has previously offered in-country data residency for Microsoft 365 and its Copilot service in 27 countries, as well as in-region residency for countries within the European Union's Data Boundary. With the new option for Copilot interaction data processing on national territory, customers can now tailor both their AI data processing and residency location to meet specific needs.

"Our principle is clear: your data, your control-wherever you operate. From local residency to in-country processing for Microsoft 365 Copilot, Microsoft is setting the standard for a world where innovation and sovereignty go hand in hand-built on strategic investments and infrastructure designed for the future of AI," said Paul Lorimer, Corporate Vice President, Office 365 Enterprise and Cloud Engineering, Microsoft.

Customer flexibility

Microsoft describes its ongoing investment in global infrastructure as an effort to support growing demand for secure deployment of AI tools. Giving organisations discretion over where Copilot interactions are processed is expected to support customers as they balance operational efficiency, local regulations, and data privacy considerations.

This extended capability focuses on the needs of governments and highly regulated industries, who typically require more control over both the residence and processing of sensitive data.