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Why is the "activate" button greyed out for my Azure Information Protection?
Because it's enabled by default now, Microsoft auto-toggled this few years back: https://learn.microsoft.com/en-us/azure/information-protection/activate-service#automatic-activation-for-azure-rights-management
in the body it states:
Protection activation status
The protection status is not activated.
Protection must be activated to configure labels that set permissions or to enable Office Information Rights Management (IRM) protection for Exchange or SharePoint.
Hm, in that case best check the status via PowerShell/activate it therein: https://learn.microsoft.com/en-us/azure/information-protection/activate-service#activate-protection-via-powershell