The selling point for M365 Copilot is that it is a turnkey AI platform that does not use data input by its enterprise customers to train generally available AI models. This prevents their internal data from being output to randos using ChatGPT. OpenAI definitely does use ChatGPT conversations to further train ChatGPT so there is a major risk of data leakage.

Same situation with all other public LLMs. Microsoft’s investments in OpenAI aren’t really relevant in this situation.

A lot of companies have existing contracts with Microsoft regarding data management, but those contracts are probably not relevant to an "almost branch of Microsoft".

Almost isn’t good enough for government use.