Sensitivity Labeling - Problem with Sensitivity for User Defined Permissions

Mitch Silberstein 150 Reputation points
2026-10-30T15:18:53.7866667+00:00

I have a label called "High - External File" that prompts for users to specify the permissions/encryption. The setting is called Let users assign permissions: In Word, PowerPoint and Excel, prompt users to specify permissions. I understand that the permissions do not work with the web apps and you must specify the permissions as a user in the desktop apps.

I get the error I am expecting in a test tenant, but not in another tenant with the same label. Why would I see this error in one tenant and not another? Client versioning? A setting I am missing? Something else?

The end goal is that I need to redirect users to the Desktop app, so I need this pop up to actually work in my production tenant.

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Microsoft 365 and Office | Subscription, account, billing | For business | Other
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Answer accepted by question author
Dora-T 2,075 Reputation points Independent Advisor
2026-11-02T05:01:18.77+00:00

Hi @Mitch Silberstein

Based on my research, Microsoft has introduced support for applying sensitivity labels with user-defined permissions directly in Office for the web (Word, Excel, and PowerPoint). This means users may now be able to specify permissions directly in the web apps instead of being prompted to open the document in the desktop application. 

You can find Microsoft's announcement here: 

Apply sensitivity labels with custom permissions in Office for the web | Microsoft Community Hub 

You may also want to review the AI answer posted in this thread, as it mentions several tenant-level settings that could affect this behavior, including: 

Sensitivity label integration with SharePoint and OneDrive. 

Co-authoring for files encrypted with sensitivity labels. 

For more details, please refer to Microsoft's documentation: 

Enable sensitivity labels for files in SharePoint and OneDrive | Microsoft Learn 

Enable co-authoring for encrypted documents | Microsoft Learn 

I hope these suggestions help narrow down the possible causes of the issue. 

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  1. AI answer

    2026-10-30T15:20:01.99+00:00

    The production tenant likely has the Office-for-the-web opt-in enabled, so the user-defined-permissions dialog is expected instead of the “Open in Desktop App” error; that error is not a reliable or configurable desktop-redirection mechanism.

    Microsoft currently lists Let users assign permissions as supported in Office for the web on an opt-in basis. When supported, selecting the label opens the custom permissions dialog directly in the browser.^1^ ^2^

    Compare the tenant settings

    Run this against each tenant from the SharePoint Online Management Shell:

    Connect-SPOService -Url https://<tenant>-admin.sharepoint.com
    
    Get-SPOTenant |
        Select-Object EnableAIPIntegration
    

    Interpret the result:

    • True: Sensitivity-label integration is enabled for SharePoint and OneDrive. Office for the web can display and apply supported labels, including user-defined-permissions labels.
    • False: The web integration is not enabled. This can produce the desktop-app redirection behavior shown in the screenshot.

    EnableAIPIntegration is the documented tenant property for checking whether sensitivity labels are enabled for Office files in SharePoint and OneDrive.^3^

    Also compare Microsoft Purview portal → Settings → Information Protection → Co-authoring for files with sensitivity labels. For user-defined-permissions labels to be selected and configured in Office for the web, Microsoft says to enable co-authoring for files encrypted with sensitivity labels.^4^

    Enabling co-authoring automatically enables SharePoint/OneDrive sensitivity-label integration if it is not already enabled. Changing this setting requires at least Information Protection Admin or DLP Compliance Management; Security Administrator and Compliance Administrator are alternatives.^5^

    What this means for the requested redirect

    There is no documented per-label option to force users from Office for the web into the desktop application when the web client supports that label configuration. In a tenant with the required features enabled, the supported behavior is:

    1. User selects High – External File in Word, Excel, or PowerPoint for the web.
    2. The browser displays the permissions dialog.
    3. The user assigns Viewer, Restricted Editor, Editor, or Owner permissions to users, groups, or an organization.^2^

    Therefore, disabling tenant-wide SharePoint/OneDrive label integration solely to obtain this popup is not a good substitute for desktop redirection: it also removes broader web labeling and encrypted-file processing capabilities, including integrations with search, DLP, eDiscovery, and collaboration.^4^

    If users must use desktop Office for a business or technical requirement, communicate and enforce that requirement separately rather than depending on this compatibility error. The available documentation does not identify a sensitivity-label policy that forces Open in Desktop App while retaining web labeling support.

    If the two tenant settings match

    Compare these remaining conditions:

    • Confirm the production test uses the same Word/Excel/PowerPoint web client, file type, published label, and label policy scope.
    • Confirm the label scope includes Files and other data assets. The custom-permissions prompt cannot be used in Word, Excel, or PowerPoint if the label excludes files.^6^
    • Test with a newly uploaded or newly edited file. SharePoint/OneDrive processing for user-defined-permissions labels applies to newly uploaded and edited files.^4^
    • If testing desktop behavior separately, check the minimum client versions. For custom permissions, Windows requires version 2004+ on Current/Monthly Enterprise Channel or 2008+ on Semi-Annual Enterprise Channel; macOS requires 16.35+.^1^

    References

    1. Minimum versions for sensitivity labels in Office apps
    2. [Office on the web](https://support.microsoft.com/office/custom-permissions-for-files)
    3. Configure SharePoint with a sensitivity label to extend permissions to downloaded documents
    4. Enable sensitivity labels for files in SharePoint and OneDrive
    5. Enable co-authoring for files encrypted with sensitivity labels
    6. Restrict access to content by using sensitivity labels to apply encryption
    AI-generated content may be incorrect. Read our transparency notes for more information.

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