Understand Licensing for Microsoft 365 Information Protection and Governance

Many Recent Changes

Information Protection and Governance is an area Microsoft has invested in heavily for the past few years. Many new features constantly appear, such as native support for sensitivity labels in the Microsoft 365 apps for enterprise, trainable classifiers, auto-labelling policies for sensitivity labels, and so on. Amongst all the change, one constant is that tenant administrators are often unsure about the licensing requirements demanded to protection data. Let’s try and figure out what the situation is.

The Split Between Manual and Automatic Processing

The first thing about information protection and governance features is that Microsoft makes a clear distinction between manual and automatic processing. When a user takes an action to do something, it’s manual processing and the required license is usually included in Office 365 E3. For information protection features, Microsoft enforced the differentiation in 2019 with the introduction of two Microsoft Information Protection service plans for Office 365. The standard plan is in Office 365 E3; the premium is in Office 365 E5.

The standard set of information protection and governance functionality in Office 365 E3 includes:

  • Manual application of sensitivity labels to Office documents via Microsoft 365 apps for enterprise, Office Online (including OWA), and Office mobile.
  • Manual application of sensitivity labels for container management to Teams, Groups, and Sites. Bizarrely, the person who applies the label (an administrator or group owner) must have an Azure AD Premium P1 license. The unfathomable logic is that the automatic inheritance of settings from the label to the underlying Azure AD group is advanced functionality.
  • Manual Application of retention labels to documents and email.
  • Basic Office 365 Message Encryption (OME). This includes the default Encrypt-Only and Do Not Forward templates to protect email.
  • Data Loss Processing for Exchange Online and SharePoint Online (Teams is an outlier as its DLP policies require Office 365 E5).

Automatic processing usually means that some form of auto-apply policy is involved. For example, you can deploy auto-label policies to apply sensitivity labels or retention labels to documents and email. Office 365 E5 covers these policies along with Advanced OME and customer key for Office 365. Sometimes Microsoft’s definition of automatic is a little strained. For instance, if you define a default retention label for a SharePoint Online document library so that new documents created in the library receive the defined label, it’s automatic and therefore needs an E5 license.

However, for more advanced functionality like Bring Your Own Key (BYOK), Hold Your Own Key (HYOK), or double-key encryption (DKE), you’ll need a premium license like Microsoft 365 E5, Microsoft 365 E5 Compliance, and Microsoft 365 E5 Information Protection and Governance. These licenses also cover scenarios like using S/MIME with sensitivity labels, data classification in SharePoint Online, and using sensitivity labels with Power BI.

Tools to Help Understand Licensing

Given the number of features and plans available in this space, the issue of licensing can be quite complex. Microsoft publishes guidance to help tenant administrators and licensing coordinators understand when premium licenses are required to cover security and compliance features. A useful Microsoft 365 compliance comparison spreadsheet (Figure 1) is also available to show which license covers each feature. The spreadsheet also identifies gaps in terms of desirable features not covered by licenses held by a tenant.

Microsoft 365 Compliance Licensing Comparison Spreadsheet
Figure 1: Microsoft 365 Compliance Licensing Comparison Spreadsheet

Non-Enforcement is No Excuse

In some cases, a feature might not enforce the stated licensing requirement. This could be because the necessary code is not yet available. The code might or not appear soon. In any case, a tenant must have licenses to use functionality. It’s a bad place to be in if features the business depends on suddenly stop working because Microsoft updates its license enforcement code.

5 Replies to “Understand Licensing for Microsoft 365 Information Protection and Governance”

  1. Is setting a default sensitivity label via a label policy considered automatic labeling and requires an E5 license?

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