Microsoft has announced plans to introduce in-country data processing for Microsoft 365 Copilot interactions in 15 countries worldwide, including Malaysia, as part of efforts to strengthen sovereign data controls and compliance for governments and regulated industries.
By the end of 2025, the feature will be available to customers in Australia, the United Kingdom, India, and Japan, followed by 11 additional countries in 2026 — Canada, Germany, Italy, Malaysia, Poland, South Africa, Spain, Sweden, Switzerland, the United Arab Emirates, and the United States.
Strengthening Data Sovereignty
The in-country processing option is designed to provide organisations with additional governance and compliance capabilities by allowing Microsoft 365 Copilot interactions to be processed within local data centres under normal operations. This approach gives customers greater control over their data and may also improve service performance by reducing latency.
This announcement is particularly relevant to government agencies and regulated sectors, which often require stricter data handling standards due to local compliance laws.
Expanding Data Residency Capabilities
Microsoft currently offers in-country data residency for Microsoft 365 and Copilot users in 27 countries, along with in-region data processing within the European Union (EU) Data Boundary. With the inclusion of in-country data processing for Copilot interactions, customers in select markets will soon be able to choose where their AI-related data is processed and stored — supporting evolving data protection requirements.
Supporting AI Governance
The move reflects an increasing global focus on AI governance, transparency, and data sovereignty. As AI tools like Copilot continue to be integrated into workplace operations, local data processing aims to balance innovation with trust and compliance, ensuring that sensitive information remains under appropriate jurisdictional control.
Further details and rollout timelines for the 2026 phase of in-country data processing are expected to be announced next year.
