Explanation:
Graphical user interface, text, application, email Description automatically generated

Co-authoring and AutoSave aren't supported and don't work for labeled and encrypted Office documents that use any of the following configurations for encryption:
* Let users assign permissions when they apply the label and the checkbox In Word, PowerPoint, and Excel, prompt users to specify permissions is selected. This configuration is sometimes referred to as
"user-defined permissions".
* User access to content expires is set to a value other than Never.
* Double Key Encryption is selected.
Reference:
https://docs.microsoft.com/en-us/microsoft-365/compliance/sensitivity-labels-coauthoring?view=o365-worldwid
https://techcommunity.microsoft.com/t5/security-compliance-and-identity/co-authoring-files-with-sensitivity-lab