M365 Secure Confidential Files: What You Need to Know

As organizations increasingly rely on Microsoft 365 for collaboration and productivity, the need to protect highly confidential files—even from tenant administrators—has become a top priority. This blog explores how to achieve that level of security, the tools and licenses required, and the technical challenges IT teams face.

Secure Folders in SharePoint Online – Can Microsoft 365 Secure folders and Confidential Files from Tenant Admins?

Yes, Microsoft 365 offers multiple layers of protection to secure files—even from tenant administrators. However, achieving this requires a combination of advanced features, encryption technologies, and careful configuration.

Key Options for Securing Files:

1. Apply Sensitivity Labels to M365 documents: Apply labels like “Highly Confidential” to restrict access. M365 encryption for files at rest and in transit.
2. Double Key Encryption (DKE): Ensures that even Microsoft cannot access the data without your second key.
3. Customer Key (BYOK): Allows organizations to control encryption keys used to protect data in Microsoft 365.
4. Information Rights Management (IRM): Prevents actions like printing, copying, or forwarding documents.
5. Privileged Access Management (PAM):Limits what tenant admins can do, using just-in-time access and approval workflows.

These features work together to ensure that sensitive documents are protected from unauthorized access—even from internal IT personnel.

What Tools and Subscriptions Are Needed?

To implement these protections, organizations must integrate several Microsoft tools and services. Here’s a breakdown of each tool, its purpose, and an example use case:

1. Microsoft Purview Information Protection

   • Purpose: Enables sensitivity labels, encryption, and data classification.
   • Example: Automatically label and encrypt HR files containing employee salaries.

2. Azure Information Protection (AIP) Plan 1

   • Purpose: Adds manual and automatic labeling capabilities to Microsoft 365 E3 or Business Premium.
   • Example: Apply “Confidential” labels to legal contracts stored in SharePoint.

3. Double Key Encryption (DKE)

   • Purpose: Provides ultimate control by requiring two keys—one held by Microsoft, one by you.
   • Example: Encrypt board meeting minutes so only authorized executives can decrypt them.

4. Customer Key (BYOK)

   • Purpose: Lets you manage your own encryption keys for Exchange Online, SharePoint, and OneDrive.
   • Example: Use your own key to encrypt financial reports stored in OneDrive.

5. Microsoft Defender for Office 365

   • Purpose: Protects against phishing, malware, and data breaches.
   • Example: Block malicious attachments in emails containing sensitive project data.

6. Microsoft Entra ID P1 (formerly Azure AD Premium P1)

   • Purpose: Enables Conditional Access and identity protection.
   • Example: Require MFA and device compliance before accessing confidential files.

7. Microsoft Intune

   • Purpose: Manages device and app policies to ensure secure access.
   • Example: Prevent downloads of sensitive files on unmanaged devices.

What Are the Technical Challenges?

While Microsoft 365 offers powerful security tools, implementing them is not plug-and-play. IT teams often face significant hurdles:

1. Complexity of Configuration

   • Setting up sensitivity labels, DKE, and Customer Key involves deep technical knowledge.
   • Misconfiguration can lead to data loss or access issues

2. Licensing Confusion

   • Many users struggle to understand which features are included in which license.
   • Example: Sensitivity labels are available in E3, but automatic labeling requires E5 Compliance.

3. Integration Fatigue

   • Microsoft 365 E5 includes over 50 security tools across six product families.
   • IT teams must constantly monitor updates, dependencies, and compatibility.

4. Maintenance Burden

   • Ongoing support is needed to manage policies, troubleshoot access issues, and audit compliance.
   • Even large enterprises report high operational overhead.

5. User Feedback

   • On forums like Reddit and Microsoft Tech Community, admins express frustration:
     • “Even enabling basic security policies feels risky in a live environment.”
     • “Complex security tooling is costly, inefficient, and lacks integration.”

These challenges highlight the need for skilled IT personnel, clear documentation, and ongoing training.

Which Microsoft 365 Licenses Needed for Securing Confidential Files?

Here’s a detailed comparison of Microsoft 365 licenses and their support for advanced file protection:

License	Sensitivity Labels	Encryption	DKE	Customer Key	Defender	PAM	Notes
Business Basic	Limited						Not suitable for confidential file protection
Business Standard	Manual						Basic protection only
Business Premium	Manual + AIP				(Plan 1)		Better, but still limited
Microsoft 365 E3	Manual + AIP				(Plan 1)		Good for manual protection
Microsoft 365 E5	Manual + Auto				(Plan 2)		Full protection suite
Microsoft 365 E5 Compliance	Auto + DLP						Add-on for E3 to match E5 security

Final Thoughts

Securing highly confidential files in Microsoft 365 is possible, but it requires:

1. The right licenses
2. A combination of security tools
3. Skilled IT teams to manage and maintain the setup

For organizations handling sensitive data—such as legal, financial, or healthcare information—investing in Microsoft 365 E5 or E3 with compliance add-ons is essential.

Looking for a simpler way to secure confidential files in Microsoft 365? Titan Workspace’s Secure Vault offers enterprise-grade protection for sensitive folders and documents—even from tenant admins—without the need for Microsoft E5 licenses, Purview, or complex configurations. It runs seamlessly on Microsoft 365 Business Standard, eliminating technical overhead and reducing IT support costs. No extra tools, no complex setup—just secure, compliant file protection built for modern businesses

See Secure Vault in action—book a demo today and discover how easy secure collaboration can be.

• Sep 16, 2025