An organization has enabled Microsoft 365 Copilot and the security team wants to understand the data residency model. A compliance officer asks where Microsoft stores Copilot for Microsoft 365 interaction data (prompts and responses). What is the correct answer?

B is correct because Microsoft 365 Copilot interaction data (prompts and responses) is stored in the user's Exchange Online mailbox in hidden folders (SubstrateHolds or similar hidden stores), which are subject to the same data residency commitments as the tenant's Exchange Online data. This means data residency follows the tenant's configured Microsoft 365 data location. A is incorrect because Copilot interaction data follows the tenant's geographic data residency configuration, not a fixed US location. C is incorrect because Copilot interaction data is governed by Microsoft 365 data residency commitments, not Azure AI services data residency policies. D is incorrect because Copilot interaction data is persistently stored in Exchange Online hidden folders and can be subject to retention policies, eDiscovery holds, and audit logging.