Microsoft Copilot and GDPR: A Complete Compliance Framework for EU Organizations

Microsoft 365 Copilot introduces data processing risks that directly conflict with GDPR's core principles—particularly data minimization (Article 5(1)(c)), purpose limitation (Article 5(1)(b)), and storage limitation (Article 5(1)(e)). The AI retrieves every document a user can technically access, without considering whether that access serves the original purpose for which the data was collected.

This creates a legal problem, not just a technical one. Under GDPR Article 5(2), controllers must demonstrate compliance ("accountability principle"). When a French employee asks Copilot for "customer complaints from Germany," and receives personal data processed for customer service purposes, repurposed for internal analysis, you've violated purpose limitation. The fact that SharePoint permissions allowed access is irrelevant—GDPR requires lawful basis for each distinct processing activity.

EU Data Protection Authorities (DPAs) have issued €4.8 billion in fines since GDPR enforcement began. The Irish DPC's €1.2 billion Meta fine (2023) centered on cross-border data transfers without adequate safeguards. Copilot processes data across Microsoft's global infrastructure, raising identical questions: What's your legal basis? Where is data processed? Can data subjects exercise their rights?

Here's the technical framework for GDPR-compliant Copilot deployment.

GDPR Article 5 Principles: How Copilot Conflicts

GDPR Article 5 establishes six data protection principles. Copilot deployment impacts all six.

Article 5(1)(a): Lawfulness, Fairness, and Transparency

Principle: Personal data must be processed lawfully, fairly, and transparently.

Copilot conflict: AI retrieval lacks transparency. Users don't know what personal data Copilot accesses, how it's processed, or who else might access the same data. Data subjects (customers, employees) weren't informed that their personal data would be processed by AI for semantic search.

Compliance requirement:

• Update privacy notices to disclose Copilot processing activities
• Identify lawful basis for each Copilot use case (Article 6)
• Document legitimate interest assessments (if relying on Article 6(1)(f))
• Implement transparency measures (audit logs, data subject access procedures)

Privacy notice addendum (required language):

"We use Microsoft 365 Copilot, an AI-powered assistant, to help employees find and analyze information across our Microsoft 365 environment. When employees use Copilot, the system may access personal data you've provided, including documents, emails, and collaboration content, to generate relevant responses. Copilot processing is based on our legitimate interest in operational efficiency (GDPR Article 6(1)(f)). You have the right to object to this processing under Article 21."

Article 5(1)(b): Purpose Limitation

Principle: Personal data must be collected for specified, explicit, and legitimate purposes and not further processed incompatibly with those purposes.

Copilot conflict: Data collected for one purpose (e.g., customer support tickets) becomes accessible through Copilot for unrelated purposes (e.g., competitive analysis). The AI doesn't enforce purpose boundaries—it retrieves whatever matches the query.

Compliance requirement:

• Document original processing purposes for each data category
• Conduct compatibility assessments for Copilot processing (Article 6(4))
• Implement technical controls (DLP policies) to enforce purpose boundaries
• Restrict Copilot access based on role and processing purpose

Purpose compatibility assessment template:

| Original Purpose | Data Category | Copilot Use Case | Compatible? | Legal Basis | |-----------------|---------------|------------------|-------------|-------------| | Customer support | Support tickets with personal data | Customer service team analysis | Yes (reasonably expected) | Legitimate interest | | Customer support | Support tickets with personal data | Marketing campaign targeting | No (incompatible) | Requires consent | | HR recruitment | Job applications | Hiring manager review | Yes (original purpose) | Contract necessity | | HR recruitment | Job applications | Sales team competitive analysis | No (incompatible) | No legal basis |

Article 5(1)(c): Data Minimization

Principle: Personal data must be adequate, relevant, and limited to what is necessary for processing purposes.

Copilot conflict: AI retrieval maximizes data access, not minimizes it. A query for "Q3 sales performance" might surface customer names, addresses, and purchase histories when only aggregated revenue figures are necessary.

Compliance requirement:

• Configure Copilot to redact personal data when not necessary for query response
• Implement sensitivity labels that prevent AI access to excessive personal data
• Pseudonymize or anonymize data where AI analysis doesn't require identifiable information
• Regular reviews of what data Copilot accesses vs. what's necessary

Technical implementation:

# Create DLP policy that redacts personal identifiers from Copilot responses
New-DlpCompliancePolicy -Name "GDPR Data Minimization - Copilot" `
    -SharePointLocation "All" `
    -OneDriveLocation "All" `
    -Comment "Redacts personal data from Copilot responses when not required for query"

New-DlpComplianceRule -Name "Redact Personal Identifiers" `
    -Policy "GDPR Data Minimization - Copilot" `
    -ContentContainsSensitiveInformation @(
        @{ Name = "EU Debit Card Number"; MinCount = 1 }
        @{ Name = "EU National Identification Number"; MinCount = 1 }
        @{ Name = "EU Passport Number"; MinCount = 1 }
        @{ Name = "EU Tax Identification Number"; MinCount = 1 }
    ) `
    -BlockAccess $false `
    -RemoveRMSTemplate $false `
    -GenerateAlert $true `
    -NotifyUser "LastModifier" `
    -NotifyUserType NotSet `
    -RedactPersonalInformation $true

Article 5(1)(d): Accuracy

Principle: Personal data must be accurate and kept up to date; inaccurate data must be erased or rectified without delay.

Copilot conflict: AI generates responses based on historical documents that may contain outdated personal data. A customer who changed addresses 6 months ago might still be associated with their old address in documents Copilot retrieves.

Compliance requirement:

• Implement retention policies that automatically delete outdated personal data
• Enable version control and document lifecycle management
• Configure Copilot to prioritize recent documents over historical ones
• Establish procedures for data subject rectification requests

Article 5(1)(e): Storage Limitation

Principle: Personal data must be kept for no longer than necessary for the purposes for which it's processed.

Copilot conflict: SharePoint and OneDrive accumulate data indefinitely. Copilot indexes everything, including personal data that should have been deleted years ago based on your retention schedule.

Compliance requirement:

• Define retention periods for each personal data category
• Configure Microsoft 365 retention policies with automatic deletion
• Implement litigation hold exceptions for ongoing legal matters
• Audit Copilot's indexed content against retention schedules

Retention policy framework:

# Create GDPR-compliant retention policies for personal data categories
$retentionPolicies = @(
    @{
        Name = "Customer Personal Data - 7 Years"
        Location = "SharePoint"
        Duration = 2555  # days
        Action = "Delete"
        DataCategory = "Customer contracts, invoices, support tickets"
    },
    @{
        Name = "Employee Personal Data - 10 Years After Termination"
        Location = "SharePoint,OneDrive"
        Duration = 3650
        Action = "Delete"
        DataCategory = "HR records, performance reviews, compensation"
    },
    @{
        Name = "Marketing Consent Records - 3 Years"
        Location = "SharePoint"
        Duration = 1095
        Action = "Delete"
        DataCategory = "Marketing consent forms, newsletter subscriptions"
    }
)

foreach ($policy in $retentionPolicies) {
    New-RetentionCompliancePolicy -Name $policy.Name `
        -SharePointLocation "All" `
        -Enabled $true `
        -Comment $policy.DataCategory

    New-RetentionComplianceRule -Name "$($policy.Name) - Rule" `
        -Policy $policy.Name `
        -RetentionDuration $policy.Duration `
        -ExpirationDateOption ModificationAgeInDays `
        -RetentionComplianceAction Delete
}

Article 5(1)(f): Integrity and Confidentiality

Principle: Personal data must be processed securely, protecting against unauthorized access, loss, or damage.

Copilot conflict: AI amplifies security risks by consolidating access to personal data. A compromised user account gains AI-powered search across all personal data the account can access—exponentially worse than traditional breaches.

Compliance requirement:

• Enforce MFA for all Copilot users
• Implement Conditional Access policies requiring managed devices
• Apply sensitivity labels with encryption to personal data
• Monitor Copilot audit logs for anomalous access patterns
• Incident response procedures for Copilot-related breaches

Article 5(2): Accountability

Principle: Controllers must demonstrate compliance with GDPR principles.

Compliance requirement:

• Maintain Data Processing Impact Assessment (DPIA) for Copilot deployment
• Document technical and organizational measures (TOMs)
• Retain audit logs demonstrating compliance (6 years minimum)
• Conduct regular compliance audits and gap assessments
• Implement governance framework with assigned responsibilities

Learn more about our GDPR Compliance Framework service.

Article 6: Lawful Basis for Copilot Processing

GDPR Article 6 requires a lawful basis for each distinct processing activity. Copilot introduces multiple processing activities, each requiring separate legal justification.

Processing Activity 1: Employee Use of Copilot for Job Functions

Lawful basis: Legitimate interest (Article 6(1)(f))

Legitimate Interest Assessment (LIA):

Purpose: Enable employees to efficiently locate and analyze business information necessary for their roles.

Necessity: Copilot significantly improves productivity by reducing time spent searching for information. Alternative methods (manual search) are less effective.

Balancing test: Employees have limited expectation of privacy for business communications stored in corporate Microsoft 365 tenant. Impact on employees is minimal—no sensitive personal data processed. Controller's interest in operational efficiency outweighs employee privacy interests.

Safeguards:

• Access restricted to business accounts only (no personal OneDrive indexing)
• Audit logging of all Copilot queries
• DLP policies preventing retrieval of highly sensitive personal data
• Right to object procedure (Article 21)

Processing Activity 2: Customer Personal Data Accessed Through Copilot

Lawful basis: Contract performance (Article 6(1)(b)) OR Legitimate interest (Article 6(1)(f))

Contract scenario: Customer support representative uses Copilot to retrieve customer's support history to resolve current issue. Processing is necessary to perform the support contract.

Legitimate interest scenario: Sales manager uses Copilot to analyze customer purchasing patterns for business development. This requires LIA:

Purpose: Improve customer relationships and identify upsell opportunities.

Necessity: Understanding customer needs requires analyzing purchase history and interaction patterns. Copilot enables this analysis at scale.

Balancing test: Customers have reasonable expectation that their data will be used for business relationship purposes (disclosed in privacy notice). Impact is low—no public disclosure or automated decision-making. Safeguards include access restrictions, audit logging, and right to object.

Safeguards:

• Access limited to customer-facing roles
• Pseudonymization of customer identifiers when possible
• DLP policies blocking access to special category data (Article 9)
• Annual review of customer data processing purposes

Processing Activity 3: Special Category Data (Article 9)

Problem: Copilot might retrieve documents containing special category data (health, biometric, genetic, political opinions, etc.) without explicit consent.

Prohibition: Article 9(1) prohibits processing special category data unless an Article 9(2) exception applies.

Solution: Technical controls preventing Copilot access to special category data.

# Create DLP policy blocking Copilot access to special category data
New-DlpCompliancePolicy -Name "GDPR Article 9 - Block Special Category Data" `
    -SharePointLocation "All" `
    -OneDriveLocation "All" `
    -Mode Enable

New-DlpComplianceRule -Name "Block Health Data" `
    -Policy "GDPR Article 9 - Block Special Category Data" `
    -ContentContainsSensitiveInformation @(
        @{ Name = "EU Health Insurance Number"; MinCount = 1 }
        @{ Name = "International Classification of Diseases (ICD-9)"; MinCount = 1 }
        @{ Name = "International Classification of Diseases (ICD-10)"; MinCount = 1 }
    ) `
    -BlockAccess $true `
    -GenerateIncidentReport "DPO@company.eu" `
    -IncidentReportContent All

New-DlpComplianceRule -Name "Block Biometric Data" `
    -Policy "GDPR Article 9 - Block Special Category Data" `
    -ContentContainsSensitiveInformation @(
        @{ Name = "EU Biometric Passport Number"; MinCount = 1 }
    ) `
    -BlockAccess $true `
    -GenerateIncidentReport "DPO@company.eu"

Learn more about our Special Category Data Protection service.

Article 25: Data Protection by Design and Default

GDPR Article 25 requires controllers to implement technical measures that embed data protection into processing systems. For Copilot, this means configuring the AI with privacy-preserving defaults, not relying on users to protect personal data.

Data Protection by Design Requirements

Article 25(1): "The controller shall...implement appropriate technical and organizational measures...designed to implement data protection principles."

Copilot implementation:

1. Pseudonymization (Article 25(1)): Replace personal identifiers with tokens before AI processing where possible.

2. Access controls: Restrict Copilot to minimum necessary data based on role.

3. Encryption: Sensitivity labels with encryption for all personal data categories.

4. Audit logging: Comprehensive monitoring of AI access to personal data.

5. Privacy-enhancing technologies: Differential privacy, federated learning, secure enclaves (future Microsoft roadmap).

Data Protection by Default Requirements

Article 25(2): "The controller shall implement appropriate technical and organizational measures for ensuring that, by default, only personal data which are necessary for each specific purpose of the processing are processed."

Copilot default configurations:

# Configure Copilot to exclude personal data by default
# Requires sensitivity labels on all personal data documents

# 1. Create sensitivity label for personal data
$labelId = New-Label -DisplayName "Personal Data - GDPR Protected" `
    -Name "PersonalDataGDPR" `
    -Tooltip "Contains personal data subject to GDPR" `
    -AdvancedSettings @{
        "CopilotAccessRestricted" = "True"
        "RequireJustification" = "True"
    }

# 2. Apply label to all documents containing personal data identifiers
$sites = Get-SPOSite -Limit All

foreach ($site in $sites) {
    $items = Get-PnPListItem -List "Documents" -PageSize 1000

    foreach ($item in $items) {
        # Scan content for personal data (requires Content Intelligence API)
        $scanResult = Invoke-PnPContentScan -Item $item -SensitiveInfoTypes @(
            "EU Debit Card Number",
            "EU Driver's License Number",
            "EU National Identification Number",
            "EU Passport Number",
            "EU Social Security Number",
            "EU Tax Identification Number"
        )

        if ($scanResult.Detected) {
            Set-PnPListItem -List "Documents" -Identity $item.Id -Values @{
                "_SensitivityLabel" = $labelId
            }
        }
    }
}

# 3. Configure DLP policy to require justification for Copilot access to labeled data
New-DlpComplianceRule -Name "Personal Data Access Justification" `
    -Policy "GDPR Data Protection by Default" `
    -ContentPropertyContainsWords @{
        Property = "_SensitivityLabel"
        Value = "PersonalDataGDPR"
    } `
    -BlockAccess $false `
    -NotifyUser "Owner,LastModifier" `
    -UserNotificationText "This document contains personal data. Provide business justification for access." `
    -RequireUserJustification $true

Article 32: Security of Processing

GDPR Article 32 requires controllers to implement appropriate technical measures to ensure security appropriate to the risk. For Copilot, this means securing the AI system itself and the data it accesses.

Article 32(1)(a): Pseudonymization and Encryption

Requirement: Implement pseudonymization and encryption of personal data.

Copilot implementation:

# Configure sensitivity labels with encryption for personal data categories
$encryptionConfig = @{
    ContentExpirationDate = $null
    OfflineAccessInterval = 7  # days
    DoNotForwardEnabled = $true
    Permissions = @(
        @{ Identity = "HR-Team@company.eu"; AccessRights = "View,Edit,Print" }
        @{ Identity = "DPO@company.eu"; AccessRights = "View,Edit,Print,Export,Reply,ReplyAll,Forward" }
    )
}

New-Label -DisplayName "Personal Data - Encrypted" `
    -Name "PersonalDataEncrypted" `
    -EncryptionEnabled $true `
    -EncryptionProtectionType "Template" `
    -EncryptionRightsDefinitions $encryptionConfig.Permissions `
    -EncryptionDoNotForward $encryptionConfig.DoNotForwardEnabled

Article 32(1)(b): Confidentiality, Integrity, Availability, and Resilience

Requirement: Ensure ongoing confidentiality, integrity, availability, and resilience of processing systems.

Copilot implementation:

• Confidentiality: Conditional Access policies requiring MFA and managed devices
• Integrity: Immutable audit logs, version control, change tracking
• Availability: Microsoft's 99.9% SLA, disaster recovery procedures
• Resilience: Data replication across Azure regions, automated failover

Article 32(1)(c): Restore Availability After Incident

Requirement: Ability to restore availability and access to personal data in a timely manner after physical or technical incident.

Copilot implementation:

• Retention policies with legal hold capabilities
• Backup and recovery procedures for SharePoint, OneDrive, Exchange
• Incident response plan with RTO (Recovery Time Objective) of 24 hours

Article 32(1)(d): Regular Testing and Evaluation

Requirement: Process for regularly testing, assessing, and evaluating effectiveness of technical measures.

Copilot testing framework:

1. Quarterly DLP policy testing: Verify Copilot can't retrieve personal data without proper authorization.

2. Annual penetration testing: Simulate attacks on Copilot infrastructure and data repositories.

3. Monthly audit log reviews: Analyze Copilot access patterns for anomalies.

4. Bi-annual Data Protection Impact Assessment updates: Reassess Copilot risks as functionality evolves.

Learn more about our GDPR Security Assessment service.

Cross-Border Data Transfers and Schrems II

Microsoft processes Copilot data globally across Azure datacenters. EU data may be transferred to US-based servers, triggering GDPR Chapter V transfer requirements.

Post-Schrems II Transfer Mechanisms

After the CJEU's Schrems II decision (Case C-311/18), Privacy Shield is invalid. EU organizations transferring personal data to US processors must use:

Option 1: Standard Contractual Clauses (SCCs) + Supplementary Measures

Microsoft offers EU Standard Contractual Clauses (2021 version) as Data Processing Addendum. But SCCs alone are insufficient post-Schrems II—you must conduct Transfer Impact Assessment (TIA).

Transfer Impact Assessment template:

| Assessment Factor | Status | Risk Level | Mitigation | |------------------|--------|------------|------------| | Destination country laws (US CLOUD Act, FISA 702) | US laws allow government access to data | High | Microsoft's encryption, audit logging | | Technical measures (encryption in transit/at rest) | TLS 1.3, AES-256 encryption | Low | Encrypted data unreadable to government | | Organizational measures (legal challenges) | Microsoft challenges warrants, transparency reports | Medium | Limited protection against national security orders | | Alternative data localization options | EU Data Boundary available | Low | Configure EU data residency |

Supplementary measures:

• Enable Microsoft's EU Data Boundary (restricts processing to EU)
• Implement Customer Lockbox (Microsoft needs approval for data access)
• Configure Azure Private Link (dedicated network connection)
• Use Customer Managed Keys (control encryption keys in Azure Key Vault)

# Configure EU Data Boundary for Microsoft 365 tenant
Connect-MgGraph -Scopes "Organization.ReadWrite.All"

Set-MgOrganization -OrganizationId $tenantId -PreferredDataLocation "EUR"

# Verify data residency settings
Get-MgOrganization -OrganizationId $tenantId |
Select-Object PreferredDataLocation, ProvisionedPlans |
Format-List

Option 2: Adequacy Decision (UK, Switzerland, etc.)

If transferring to countries with EU adequacy decisions, no additional safeguards required. Microsoft has UK and Swiss datacenters.

Option 3: Consent (Article 49(1)(a))

Not practical for Copilot—explicit consent required from each data subject for each transfer. Infeasible at scale.

Learn more about our Cross-Border Data Transfer Assessment service.

Data Subject Rights (Chapter III)

GDPR Chapter III grants data subjects eight rights. Copilot complicates exercising these rights.

Right of Access (Article 15)

Challenge: Data subject requests "all personal data processed about me." You must identify every document Copilot indexed containing their personal data across SharePoint, OneDrive, Teams, Exchange.

Solution:

# Search for all documents containing data subject's personal identifiers
$dataSubjectName = "John Smith"
$dataSubjectEmail = "john.smith@example.com"
$dataSubjectId = "ID12345"

# Search across SharePoint
$sites = Get-SPOSite -Limit All
$results = @()

foreach ($site in $sites) {
    $searchQuery = "($dataSubjectName OR $dataSubjectEmail OR $dataSubjectId)"
    $searchResults = Invoke-PnPSearchQuery -Query $searchQuery -All

    foreach ($result in $searchResults.ResultRows) {
        $results += [PSCustomObject]@{
            Title = $result.Title
            URL = $result.Path
            LastModified = $result.LastModifiedTime
            Author = $result.Author
        }
    }
}

$results | Export-Csv -Path "C:\GDPR\DataSubjectAccess-$dataSubjectEmail.csv" -NoTypeInformation

Right to Rectification (Article 16)

Challenge: Data subject requests correction of inaccurate personal data. You must update all documents containing the inaccurate data.

Solution: Version control and document update procedures. Microsoft 365 tracks versions—update the document, old versions remain in history (complies with accuracy requirement).

Right to Erasure (Article 17)

Challenge: Data subject requests deletion. You must identify and delete all personal data across Microsoft 365, including versions, audit logs, and backups.

Solution:

# Implement right to erasure procedure
$dataSubjectEmail = "john.smith@example.com"

# 1. Identify all content
$content = Search-UnifiedAuditLog -UserIds $dataSubjectEmail -StartDate (Get-Date).AddYears(-7) -EndDate (Get-Date) -ResultSize 5000

# 2. Delete SharePoint documents authored or mentioning data subject
$sites = Get-SPOSite -Limit All
foreach ($site in $sites) {
    $items = Get-PnPListItem -List "Documents" | Where-Object { $_.FieldValues.Author.Email -eq $dataSubjectEmail }
    foreach ($item in $items) {
        Remove-PnPListItem -List "Documents" -Identity $item.Id -Recycle:$false -Force
    }
}

# 3. Purge from recycle bins
Clear-PnPRecycleBinItem -All -Force

# 4. Purge audit logs (where legally permissible)
# Note: GDPR Article 17(3)(e) exemption for legal compliance—audit logs may be retained

Important: Right to erasure has exceptions (Article 17(3)). You may retain personal data for:

• Legal compliance (tax records, financial reporting)
• Legal claims defense
• Public interest archiving

Right to Restriction (Article 18)

Challenge: Data subject requests restriction of processing while disputing accuracy or lawfulness.

Solution: Apply sensitivity label that blocks Copilot access but retains data.

# Create "Processing Restricted - GDPR Article 18" label
$restrictedLabelId = New-Label -DisplayName "Processing Restricted - GDPR Article 18" `
    -Name "ProcessingRestricted" `
    -Tooltip "Data subject has requested restriction of processing" `
    -AdvancedSettings @{
        "CopilotAccess" = "Blocked"
        "SearchIndexing" = "Disabled"
    }

# Apply to specific data subject's documents
$dataSubjectEmail = "john.smith@example.com"
$items = Get-PnPListItem -List "Documents" | Where-Object { $_.FieldValues.Author.Email -eq $dataSubjectEmail }

foreach ($item in $items) {
    Set-PnPListItem -List "Documents" -Identity $item.Id -Values @{
        "_SensitivityLabel" = $restrictedLabelId
    }
}

Right to Object (Article 21)

Challenge: Data subject objects to processing based on legitimate interest.

Solution: Cessation of processing unless you can demonstrate compelling legitimate grounds that override data subject's interests.

Procedure:

1. Receive objection request from data subject
2. Conduct balancing test: your interests vs. data subject's rights
3. If data subject's rights prevail, cease processing (apply restriction label)
4. If compelling legitimate grounds exist, document justification and continue processing
5. Inform data subject of outcome within 1 month

Learn more about our Data Subject Rights Management service.

Data Protection Impact Assessment (DPIA)

GDPR Article 35 requires DPIA when processing is "likely to result in high risk to rights and freedoms." Copilot meets this threshold:

• Large-scale processing of personal data (Article 35(3)(c))
• Systematic monitoring (Article 35(3)(c))
• New technology (AI) (Article 35(3)(b))

DPIA Framework for Copilot

1. Description of Processing

| Element | Description | |---------|-------------| | Nature | AI-powered semantic search and retrieval of personal data across Microsoft 365 | | Scope | All SharePoint sites, OneDrive folders, Teams conversations, Exchange emails | | Context | Business productivity tool used by employees to locate information for job functions | | Purposes | Improve employee efficiency, reduce time searching for information, enable data-driven decision making |

2. Necessity and Proportionality Assessment

Necessity: Is Copilot necessary to achieve stated purposes?

• Yes. Alternative manual search is significantly less efficient. Copilot enables semantic understanding that keyword search can't provide.

Proportionality: Are risks proportionate to benefits?

• Requires safeguards. Without controls, risks outweigh benefits. With appropriate technical measures (DLP, encryption, access controls), benefits justify risks.

3. Risk Assessment

| Risk | Likelihood | Severity | Overall Risk | Mitigation | |------|-----------|----------|--------------|------------| | Unauthorized access to personal data | High | High | Critical | MFA, Conditional Access, DLP policies | | Purpose limitation violation | High | Medium | High | DLP policies enforcing purpose boundaries | | Excessive data retention | Medium | Medium | Medium | Retention policies with automatic deletion | | Cross-border transfer without safeguards | Medium | High | High | EU Data Boundary, SCCs, TIA | | Inability to exercise data subject rights | Medium | Medium | Medium | Automated search and deletion procedures | | Data breach exposing personal data | Low | Critical | High | Encryption, audit logging, incident response |

4. Measures to Address Risks

• Technical measures: Sensitivity labels, DLP policies, encryption, access controls, audit logging
• Organizational measures: Privacy training, incident response plan, Data Protection Officer oversight
• Procedural measures: Data subject rights procedures, regular compliance audits, vendor management

5. Consultation with Data Protection Officer

GDPR Article 35(2) requires DPO consultation before DPIA completion. DPO must review risk assessment and approve mitigation measures.

6. Review and Update

DPIA must be reviewed annually or when processing changes materially (new Copilot features, expanded scope, increased user base).

Download our DPIA template for Copilot deployment.

Frequently Asked Questions

Is Microsoft 365 Copilot GDPR compliant?

Microsoft's infrastructure for Copilot complies with GDPR when configured properly, but GDPR compliance is a shared responsibility. Microsoft acts as a data processor under Article 28, providing a Data Processing Addendum (DPA) with Standard Contractual Clauses. However, you are the data controller responsible for implementing lawful processing basis (Article 6), conducting Data Protection Impact Assessments (Article 35), enabling data subject rights (Chapter III), and configuring technical safeguards (Article 32). Most organizations fail on access control and purpose limitation—Copilot retrieves personal data without enforcing the original processing purpose. Technical implementation of DLP policies, sensitivity labels, and retention schedules is required for compliance.

What is the lawful basis for processing personal data with Copilot?

The lawful basis depends on the specific processing activity under Article 6. For employee use of Copilot for job functions, legitimate interest (Article 6(1)(f)) typically applies—you must conduct a Legitimate Interest Assessment demonstrating operational efficiency benefits outweigh employee privacy impact. For customer personal data accessed through Copilot, contract performance (Article 6(1)(b)) applies when necessary to fulfill contractual obligations (e.g., customer support), or legitimate interest when used for business development. For special category data (Article 9), you must identify an Article 9(2) exception or block Copilot access entirely using DLP policies. Generic "consent" is insufficient—Article 7 requires specific, informed, freely given consent for each processing purpose.

How do we handle cross-border data transfers to the US under Schrems II?

Post-Schrems II, transferring EU personal data to US processors requires Standard Contractual Clauses (SCCs) plus supplementary measures. Microsoft provides SCCs as part of their Data Processing Addendum, but you must conduct a Transfer Impact Assessment (TIA) evaluating US surveillance laws (CLOUD Act, FISA 702) and whether Microsoft's technical safeguards (encryption, audit logging) provide adequate protection. Supplementary measures include: (1) enabling Microsoft's EU Data Boundary to restrict processing to EU datacenters; (2) implementing Customer Lockbox requiring your approval for Microsoft access; (3) using Customer Managed Keys in Azure Key Vault to control encryption; and (4) configuring Azure Private Link for network isolation. Document your TIA demonstrating these measures provide "essentially equivalent" protection to GDPR.

How do we enable data subject rights (access, erasure, rectification) with Copilot?

Technical implementation of data subject rights requires automated search and action procedures. For right of access (Article 15), use Microsoft Graph API and PowerShell to search SharePoint, OneDrive, Exchange, and Teams for documents containing the data subject's identifiers, then export results within 1 month. For right to erasure (Article 17), delete identified content, purge recycle bins, and remove from backups where legally permissible (note Article 17(3) exceptions for legal compliance). For right to restriction (Article 18), apply sensitivity labels that block Copilot access while retaining data during dispute resolution. For right to object (Article 21), conduct balancing test and cease processing unless compelling legitimate grounds override. Audit logs must track all data subject rights requests and responses for accountability (Article 5(2)).

How long does GDPR-compliant Copilot implementation take for EU organizations?

For a typical EU enterprise (3,000-7,000 users), expect 14-18 weeks for comprehensive GDPR compliance: 3-4 weeks for Data Protection Impact Assessment and risk analysis; 4-6 weeks for sensitivity label deployment, DLP configuration, and purpose limitation controls; 2-3 weeks for retention policy implementation and lifecycle management; 2-3 weeks for cross-border transfer assessment and EU Data Boundary configuration; 2-3 weeks for data subject rights procedures and testing; 1-2 weeks for DPO review and validation. Organizations with existing Microsoft Purview implementations can accelerate to 12-14 weeks. Those with complex multi-national data flows or decentralized governance may require 20+ weeks. Timeline depends on number of processing activities, data categories, and existing governance maturity.