This seems to be an ongoing issue currently, the way to resolve it is to re-enable the corresponding service principal. In PowerShell, you can do this via:
Update-MgServicePrincipalByAppId -AppId 40775b29-2688-46b6-a3b5-b256bd04df9f -AccountEnabled:$true
If you are not familiar with PowerShell, open the Entra portal > Enterprise applications > remove the filters > search for "40775b29-2688-46b6-a3b5-b256bd04df9f" (or the corresponding "Microsoft Information Protection API" display name) > click the entry > click Properties > make sure Enabled for users to sign-in? is set to Yes.