Microsoft continues to refine its Product Terms to address evolving business needs, regulatory requirements, and security considerations. The February 2025 updates bring notable changes to privacy and security policies, Microsoft 365, and Azure. Below, we provide a breakdown of the most impactful modifications and strategic insights to help organizations adapt effectively.

Privacy & Security Terms Updates

In response to growing data privacy concerns and regulatory demands, Microsoft has expanded its EU Data Boundary Services coverage:

• New Services Added: Azure Managed Applications, Azure Resource Manager, and Cloud PC have been added to the EU Data Boundary Services tables, reinforcing Microsoft’s commitment to regional data sovereignty.
• Expanded Data Storage Coverage: Professional Services Data is now explicitly included in EU Data Boundary Services, offering greater transparency on where and how business-critical data is stored.
• Data Protection Alignment: The Microsoft Products and Services Data Protection Addendum has been updated to reflect these changes, ensuring contractual clarity.

Strategic Impact for Organizations

• Enhanced Compliance: Organizations handling EU customer data can leverage these updates to strengthen their regulatory posture and align with GDPR and other data protection frameworks.
• Greater Control Over Data Residency: Businesses relying on Microsoft’s cloud infrastructure should assess whether these changes impact their data governance strategies.

Microsoft 365 Updates: Security & Availability Adjustments

Several targeted modifications have been made within the Microsoft 365 ecosystem, particularly affecting security tools and product availability:

• Microsoft Defender for Business Device Limits: Customers can now apply Defender for Business protection to five devices per user, streamlining endpoint security management for SMBs and enterprises.
• Student Use Benefit Add-on Removed: Microsoft has eliminated the Microsoft 365 Information Protection and DLP – Student Use Benefit Add-on from the Availability and Prerequisite Tables.

What This Means for IT Teams

• Optimized Security Licensing: The five-device limit allows businesses to balance cybersecurity and cost-effectiveness, ensuring robust protection without unnecessary overspending.
• Education Sector Considerations: Educational institutions should reassess their data loss prevention strategies and explore alternative compliance measures in light of the Student Use Benefit removal.

Microsoft Azure Updates: Developer Responsibility & Compliance

Developers working with Azure Communication Services must now obtain explicit consent before recording conversations when tenant administrators have enabled the feature.

Actionable Insights for Developers & Compliance Teams

• Legal & Ethical Considerations: Companies utilizing recording features should update their privacy policies and user consent workflows to comply with Microsoft’s stricter requirements.
• Proactive Compliance: Implementing automated consent capture mechanisms can mitigate regulatory risks and improve user transparency.

PSTN Audio Services: Rollout, Renaming & Compliance Considerations

Microsoft has changed the name of Audio Services to PSTN (Public Switched Telephone Network) Audio Services while expanding its capabilities in North America, particularly in SMS functionality within Microsoft Teams.

Key Updates:

• Teams SMS Rollout: Microsoft is introducing SMS functionality in Teams, initially available to users in the USA, Canada, and Puerto Rico with a Microsoft Teams Calling Plan license. This enables users to send and receive text messages directly via Teams.
• Customer Responsibilities: New clauses in the Product Terms clarify that Microsoft submits customer applications to the underlying SMS operator, but it is the customer’s responsibility to resubmit applications if circumstances change.
• Privacy & Compliance: Microsoft has updated its messaging policy to include explicit privacy language. More details can be found in Microsoft’s Messaging Policy.

Business Implications:

• Potential Expansion: While currently limited to North America, Microsoft may expand this functionality globally, which could impact international business communication strategies.
• Employee Well-being & Compliance Risks: Unrestricted SMS messaging outside of work hours could blur the boundaries between personal and professional time, potentially leading to employee dissatisfaction or concerns that trigger scrutiny under ‘Right-to-Disconnect’ laws. Organizations should establish clear policies to manage after-hours communication and mitigate potential risks.

Final Thoughts: Maximizing Value from Microsoft’s Updates

February’s updates signal Microsoft’s commitment to security, transparency, and regulatory compliance. Organizations that proactively adapt to these changes will be better positioned to minimize risks, optimize licensing strategies, and maintain a strong compliance posture.

How ITAA Can Help

Navigating Microsoft’s evolving product terms can be complex. At ITAA, our experts specialize in helping businesses interpret these updates, optimize their IT investments, and ensure compliance. Whether you need guidance on security, licensing, or cloud governance, we are here to help you turn these changes into strategic advantages.

Contact ITAA today to discuss how these updates impact your organization and develop a tailored action plan.

About the Author

Robert Wright, Microsoft Consultant

Robert Wright is an ex-Microsoft auditor turned Licensing Consultant. He focuses on license compliance with a strong emphasis on cost-saving strategies. With a proven track record, he excels in optimizing licensing portfolios across various industries, particularly in the public sector.