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Flex Routing in Microsoft 365: What EU Admins Need to Know Now

·3 mins
Microsoft 365 Copilot
Daniel Kordes
Author
Daniel Kordes
Microsoft 365 Consultant and Microsoft MVP based in Zurich. I blog about Microsoft 365, Azure and cloud technologies.
Table of Contents

–> Auch auf deutsch verfügbar!

This article was translated from German with the help of Claude.

For years, Microsoft has been courting European businesses with the so-called “EU Data Boundary”. The promise: all data is stored and processed within the EU. However, a new exception for the Microsoft 365 Copilot has now been announced. And it is significant.

What is Flex Routing?
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With “Flex Routing”, Microsoft allows the AI processing (LLM inferencing) of Microsoft 365 Copilot to take place outside the EU Data Boundary during peak demand. In practice, this means your Copilot requests can be processed in data centers in the US, Canada, or Australia when EU capacity is insufficient.

This applies to the processing step where the AI model executes your input, for example summarizing documents or answering questions. The exact moment when your company data runs through the language model.

What does Microsoft promise?
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Microsoft emphasizes that data remains encrypted in transit and at rest, even with Flex Routing. Permanent storage is supposed to continue within the EU. The exception is pseudonymized data, which may be stored outside the EU for security and operational purposes. At first glance, that does not sound too dramatic.

However, the wording in the official documentation is rather vague. It is not clearly defined which data leaves the EU for which purpose.

What should be viewed critically?
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Opt-Out instead of Opt-In
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The biggest criticism: Flex Routing is enabled by default. For tenants created after March 25, 2026, it is active right away. Existing customers should check the Message Center (ID MC1269223). It informs that Flex Routing will be enabled as well. The lead time? Just 14 days.

This is particularly problematic for organizations that have deliberately chosen the EU Data Boundary, whether due to internal compliance requirements, regulatory obligations, or simply on principle.

The EU Data Boundary is being weakened
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Anyone who has previously assured their customers or management that all Microsoft 365 data stays within the EU now has to qualify that statement. Flex Routing is a clear breach of the EU Data Boundary promise, even if Microsoft frames it as temporary load balancing.

How to disable Flex Routing
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You can disable Flex Routing at any time in the Microsoft 365 Admin Center:

  1. Sign in to the Microsoft 365 Admin Center with the AI Administrator role.
  2. Navigate to Copilot → Settings → Flexible inferencing during peak load periods.
  3. Select “Do not allow flex routing”.

If you disable Flex Routing in the M365 Admin Center, the setting is also applied in the Power Platform Admin Center. LLM inferencing will then take place exclusively within the EU Data Boundary, even during peak demand.

My conclusion
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I understand that Microsoft has not yet sufficiently expanded its AI capacity in Europe and wants to handle peak loads globally. Nevertheless, the way Flex Routing is being introduced is problematic: enabled by default, short lead time, and vague documentation.

If you are an admin responsible for data privacy and compliance, you should act now:

  1. Check your Flex Routing setting in the M365 Admin Center.
  2. Evaluate together with your Data Protection Officer whether Flex Routing is acceptable for your organization.
  3. Disable Flex Routing if your compliance requirements do not allow data processing outside the EU.
  4. Document your decision, regardless of which direction you choose.

This topic is only going to grow, as the demand for AI computing power is increasing rapidly. Stay on top of it and keep an eye on your settings.

Sources
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