Editor’s note – April 3, 2026 update:
Since our November announcement, we’ve made meaningful progress while taking a careful, deliberate approach to how these new capabilities are delivered. To ensure local inferencing meets customer needs, we’re refining our timeline and scope. Our commitment remains: your data, your control – wherever you operate.
- We will now deliver local data inferencing for Copilot interactions across Microsoft 365 Copilot and Microsoft Copilot Studio, Power Platform, and Dynamics 365. Inferencing is the processing step when an AI model executes the prompt to produce an output or response, such as summarizing content or answering a question.
- Local data inferencing for Copilot interactions in Microsoft 365 Copilot is expected to become available in Australia, India, the United Arab Emirates, United Kingdom and the United States by the end of 2026, with support for Canada to follow in 2027 and Japan in 2028.
- For customers who are already performing Copilot interactions using Microsoft Copilot Studio, Power Platform, and Dynamics 365 in the countries noted for future availability, there is no change to current settings and processing guidance established in the Power Platform Admin Center (PPAC). Expansion of current services will be subject to the updated availability noted above.
- As an update to our earlier announcement, local inferencing will be delivered at a regional level for countries in the European Union (EU) and European Free Trade Association (EFTA), aligned with our commitments under the EU Data Boundary.
As every organization evolves to become a Frontier Firm—human-led, agent-operated—trust is the foundation that powers AI transformation for governments and enterprises worldwide. Where and how data is processed and stored by AI-powered services helps further reinforce that foundation of trust. Microsoft is pleased to announce that we are making in-country data processing for customers’ Microsoft 365 Copilot interactions1 available in 15 countries around the world. By the end of 2025, Microsoft will offer customers in four countries—Australia, the United Kingdom, India, and Japan—the option to have Microsoft 365 Copilot interactions processed in-country. In 2026, we’ll expand this option to customers in eleven more countries including Canada, Germany, Italy, Malaysia, Poland, South Africa, Spain, Sweden, Switzerland, the United Arab Emirates, and the United States.
In-country data processing: Countries and timeline
This offer is designed to enable customers, particularly those in government and highly regulated industries, to access Microsoft 365 Copilot with an additional option for governance, security, and regulatory compliance. With in-country processing, Copilot interactions are processed, under normal operations, in data centers located within a nation’s borders, giving customers greater control over their data. In-country data processing can also improve performance by reducing latency, delivering an even more responsive Copilot experience.
Investing in customer flexibility, building customer trust
For years Microsoft has made significant investments in its global infrastructure to meet our customers’ local and regional security, compliance, and governance needs. Today, we offer in-country data residency to Microsoft 365 and Microsoft 365 Copilot customers in 27 countries and in-region data residency and processing for countries within the European Union (EU) Data Boundary. Now, with the addition of in-country data processing for Microsoft 365 Copilot interactions in 15 countries, Microsoft can offer customers a choice for the location of both AI data processing and residency, that can further at-scale adoption and deployment of Microsoft 365 Copilot.
Looking ahead
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. Stay tuned for more details and the rollout timeline for in-country data processing for countries coming in 2026.
Learn more about the Sovereignty announcements at the Frankfurt AI Tour in the Azure blog.
1Prompts and responses from Microsoft 365 Copilot large language models hosted on Azure OpenAI.
