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How do sensitivity labels work in Microsoft 365?

When you apply a sensitivity label, you classify data and enable proactive protection settings and actions.

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Sensitivity labels operate at two levels:

Workspace / container level:

  • Controls internal and external access to Teams, SharePoint sites, and M365 Groups.
  • Configures privacy settings and external sharing rules.
  • Applies Conditional Access settings, such as blocking access from unmanaged devices.
  • Defines whether private teams are discoverable in search results.

Files / meetings / emails level:

  • Applies encryption and content markings.
  • Restricts access to authorized users.
  • Enables custom headers, footers, and watermarks.
  • Auto-labels files and emails based on specified conditions.
  • Protects meetings and chats by enforcing label-based security.
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