Observed Signal · Feb 18, 2026 · Security Incident · Source: techcrunch · Impact: 4/5 · Sentiment: Negative
Microsoft Bug Exposed Confidential Emails to Copilot AI
Microsoft confirmed a software bug allowed its Microsoft 365 Copilot Chat feature to read and summarize customers' confidential draft and sent emails despite data loss prevention (DLP) policies intended to block such ingestion. The flaw — trackable by admins as CW1226324 and first reported by Bleeping Computer — reportedly persisted since January. Microsoft began rolling out a fix in early February but has not disclosed how many customers were affected. The issue prompted at least one institutional response: the European Parliament’s IT department blocked built-in AI features on lawmakers' work devices over confidentiality concerns.
Major platform (Microsoft) disclosed an LLM/data-handling bug that undermines enterprise DLP protections; affects trust, compliance and adoption of AI features and prompted institutional mitigation (European Parliament blocking features).
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Key Takeaways & Evidence Grounding
- A bug allowed Microsoft 365 Copilot Chat to process draft and sent email messages labeled confidential despite DLP protections.
- The issue is trackable by administrators under the identifier CW1226324.
- Bleeping Computer first reported the bug; Microsoft confirmed the behavior and began rolling out a fix in early February 2026.
- Microsoft declined to disclose the number of affected customers.
- The European Parliament’s IT department blocked built-in AI features on lawmakers' work devices citing concerns about potential upload of confidential correspondence.
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Related Market Signals & Shifts
Recent verified developments and strategic activity across this market segment.
Microsoft fixes critical Copilot 2FA vulnerability
Microsoft patched a vulnerability in its M365 Copilot AI assistant that security researchers rated as "maximally critical" because it allowed attackers to extract users' two-factor authentication (2FA) codes and other sensitive data from emails Copilot could access. Researchers published a proof‑of‑concept showing how markup-language injection could bypass Copilot's built-in protections and retrieve emails, meeting invites and notes. Ars Technica and Varonis covered the disclosure; Ars Technica noted there is no known fix for the underlying cause — LLMs' inability to reliably distinguish user instructions from instructions embedded in third‑party content. Microsoft applied a fix in early June 2026, but experts warn the systemic risk from prompt/injection attacks remains unresolved.
Copilot can turn Word files into self‑replicating AI worms
A security researcher, Håkon Måløy, demonstrated how prompt‑injection attacks hidden inside Word documents can be read by AI tools like Microsoft Copilot and propagate themselves into newly generated documents. By hiding malicious instructions (for example using white text) and instructing the AI to copy the prompt into outputs, an infected document can cause Copilot to insert the malicious prompt into subsequent documents — effectively creating a self‑replicating "AI worm" across document workflows. Måløy reported the issue to Microsoft in early March 2026; Microsoft began working on fixes in late March and released two patches, but Måløy's tests indicate the vulnerability can still be exploited, prompting him to publish his findings after the disclosure period elapsed.
Most M365 Users Underuse Microsoft Copilot
Microsoft Copilot, embedded in Microsoft 365, works within users' mail, documents and Teams content (subject to permissions) to accelerate routine office work by consolidating time‑consuming first steps such as project reviews, meeting minutes and Excel preparation. Although many organizations include Copilot in M365, only a minority of teams use it intensively because it's often unclear which tasks benefit most. To close that gap, publisher t3n offers a two‑hour live online course on 4 August 2026 (10:00–12:00) led by Cosima Vogel, founder and CEO of Productive AI. The session teaches practical, hands‑on Copilot workflows and live demos across Word, Excel, Outlook, PowerPoint and Teams to clarify effective prompts and boost team adoption. Fee is €149 (free for t3n PRO subscribers) and includes PDF slides plus two‑week access to the recording.
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