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Will my personal data be sent to cloud?

No, all data is encrypted locally and will NOT sent to cloud even though the adopted IRM service is cloud-based.

Both your unprotected and protected files will not be sent to the cloud or seen by the cloud provider (Microsoft). The cloud providers will only have the content keys that are necessary for the encryption and decryption process.

You can understand more about how the protection process works from this article:

https://docs.microsoft.com/en-us/rights-management/understand-explore/how-does-it-work