What is auto-labeling and why is it important?

Auto-labeling policies automatically apply sensitivity labels to emails, documents, and other content across Microsoft 365. This process helps organizations protect sensitive data consistently without relying on users to manually classify every piece of content.

There are two ways to automatically apply sensitivity labels in Microsoft 365:

• Client-side labeling: Office apps recommend or automatically apply labels while users are working in Word, Excel, PowerPoint, or Outlook.
• Service-side labeling: Labels are applied automatically to stored content in SharePoint, OneDrive, and Exchange, even if users don’t interact with the content.

Let’s take a closer look at how both methods work and how to configure them in your environment.

Auto-labeling in Office apps using client-side labeling

Client-side auto-labeling allows Office apps to apply or recommend sensitivity labels based on the content users create or edit. This approach helps guide users to label content correctly while still allowing flexibility when appropriate.