This is by design. Default settings (users can override) means the user setting in Edge browser "..."->settings->On startup takes a higher priority. The group policies set under Microsoft Edge - Default Settings (users can override)
folder are just recommended settings, users can override them in Edge browser settings. So if users have different settings in Edge browser, the group policies under Microsoft Edge - Default Settings (users can override)
folder won't take effect.
If you want policies to take effect all the time and override user settings, please set the policies under Microsoft Edge
folder.
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Regards,
Yu Zhou