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Some Microsoft Online Services offer features that use AI models and functionalities to deliver intelligent capabilities (collectively, AI Functionalities). AI Functionalities may be operated and provided by Microsoft or by third-parties. Third-party AI providers may offer AI functionalities either as independent data processors with their own direct contractual relationship with Microsoft enterprise customers or as AI Subprocessors. This classification determines how data is processed by that third party and governs the applicable contractual, privacy, and compliance obligations.
AI Functionalities can help people in your organization with tasks such as:
- Summarize complex information
- Answer questions using source material
- Synthesize across multiple sources
- Generate ideas, draft and edit content
Each AI model enhances Microsoft 365 Copilot features differently, with unique strengths and specialties that can improve performance, response quality, or cost efficiency depending on your needs. To learn more about Microsoft 365 Copilot, see Microsoft 365 Copilot overview.
To learn more about how different Microsoft Online Services incorporate such AI services, please review the applicable product documentation.
This article explains the differences between the types of AI models used in Microsoft Online Services:
- AI models hosted and operated by Microsoft
- AI independent processors
- AI Subprocessors
Important
Microsoft applies Responsible AI (RAI) principles and security and safety evaluations across AI Services integrated with Microsoft online services. AI Services offered by third-party AI Subprocessors may also have their own RAI and safety evaluations embedded in their models which operate in addition to Microsoft's processes. Please review product documentation for more information.
Types of AI models used in Microsoft Online Services
AI Models hosted and operated by Microsoft
Certain AI models used in Microsoft Online Services are hosted on Azure and provided to customers directly by Microsoft (such as Azure OpenAI or Black Forest Labs FLUX). These models are evaluated by Microsoft and deeply integrated into the Azure ecosystem. Therefore, they are offered under Microsoft's Data Protection Addendum (DPA), Product Terms, and applicable enterprise safeguards. Data does not leave Microsoft.
AI Subprocessor
An AI Subprocessor is a third-party AI provider that handles data on Microsoft's behalf and under Microsoft's Data Protection Addendum (DPA), Product Terms, and enterprise safeguards. This helps ensure enterprise-grade compliance, security, and privacy.
When used, an AI Subprocessor handles data to deliver the specific services and functionalities Microsoft has engaged them to provide. Microsoft provides transparency through published disclosures and product documentation. For more information on these differences, see Overview of AI Subprocessors.
AI Independent Processor
An AI independent processor is a third-party AI provider that processes data under its own data processing commitments, privacy, compliance, and enterprise terms. As a result, this data handling occurs outside of Microsoft's Data Protection Addendum, Product Terms, and enterprise safeguards. As the admin, you control which models users can access by turning models on or off in the Microsoft 365 admin center or Power Platform admin center.
Note
If an AI independent processor isn't enabled by an admin in the Microsoft 365 Admin Center or equivalent admin center, third-party AI Functionalities aren't used by any Microsoft Online Services.