Microsoft to Process Copilot Data Locally in India, 14 Other Nations by 2026
Microsoft will introduce in-country data processing for its Microsoft 365 Copilot AI tool across 15 countries by 2026, strengthening data sovereignty and regulatory compliance for users.
Key Takeaways
- India, Australia, Japan, and UK get local data processing by end of 2025
- 11 more countries including Canada, Germany, US, and UAE to follow by 2026
- Move enhances data governance for government and regulated sectors
- Follows recent compliance overhaul after Nayara Energy dispute
Phased Rollout of Local Data Processing
Customers in India, Australia, Japan, and the United Kingdom will be the first to gain the option for local processing of their Copilot interactions by the end of 2025, according to a company announcement.
By 2026, this capability will expand to 11 additional nations including Canada, Germany, the United States, and the UAE.
Enhanced Data Governance and Security
This initiative is part of Microsoft’s strategy to enhance governance, security, and performance for government and highly regulated industries by ensuring user data is processed and stored locally.
With this change, Copilot interactions—including prompts and responses hosted on Azure OpenAI models—will be handled within local data centers.
The company noted this builds on existing data residency efforts covering 27 nations for Microsoft 365 and Copilot, as well as the EU Data Boundary.
Compliance Framework Overhaul
The expanded sovereign controls follow a recent overhaul of Microsoft’s compliance framework, initiated after a legal dispute with Nayara Energy earlier this year.
In July, Microsoft temporarily stopped providing services to the India-based refiner following EU sanctions over its Russian links. Nayara Energy had initiated legal action, but Microsoft resolved the issues before court proceedings.
To prevent recurrence, Microsoft announced enhanced guidelines and safety measures for Indian services last month.
As part of this overhaul, Microsoft established a Public Sector and Critical Infrastructure Customer Council, led by Microsoft India and South Asia President Puneet Chandok, to engage with critical sectors.
