When you use Microsoft 365 Copilot in PowerPoint to generate a presentation from a Word document with a Highly Confidential sensitivity label, the following occurs:
*-> Sensitivity Label Inheritance: The newly generated PowerPoint presentation will automatically inherit the Highly Confidential sensitivity label from the source Word document.
Protection Settings Enforcement: All protection settings associated with that label, such as encryption, watermarks, or restricted sharing permissions, will be applied to the new presentation.
*-> Permission Verification: Copilot will verify that you have the necessary EXTRACT (Copy) and VIEW usage rights for the Word document. If the label's encryption settings or a Microsoft Purview Data Loss Prevention (DLP) policy blocks content extraction for Copilot, the generation process will fail or be blocked.
Strict Access Control: If the Word document uses Double-Key Encryption (DKE) or restricted Extract privileges, PowerPoint Copilot will honor these protections and will not create the presentation.
Reference:
https://learn.microsoft.com/en-us/copilot/microsoft-365/microsoft-365-copilot-architecture-data-protection-auditing