Hi @Mark Reel
According to article "Overview of optional connected experiences in Office", when you use any of the optional cloud-backed services described in this article, Microsoft may collect required service data that may contain "personal data" as defined by Article 4 of the European GDPR.
It is also stated in this article: These cloud-backed services are optional. Whether you use them is up to you. They're provided to you under the terms of the Microsoft Services Agreement and privacy statement.
As Harry.Liu has answered to you in Answers community, based on "How we use personal data" in Microsoft Privacy Statement, it is speculated that Microsoft may use your data to develop and train our AI models.
If you turn off Connected Experiences, some related cloud service features will be unavailable. Such as "Analyze Data" in Excel, "Designer" in PowerPoint. For more, please refer to "Connected experiences in Office".
In addition to these functions, you can still use Office software to process text, data, etc.
For some Office apps on Windows devices, to turn off Connected Experiences in organization, you may use group policy: User Configuration\Policies\Administrative Templates\Microsoft Office 2016\Privacy\Trust Center
- Allow the use of connected experiences in Office
For individual computers where Group Policy is not available, you can turn these experiences off in one Office app via going to File > Account > Manage Settings (In Outlook it's under File > Office Account). The reference is: Connected experiences in Microsoft 365.
If the answer is helpful, please click "Accept Answer" and kindly upvote it. If you have extra questions about this answer, please click "Comment". Note: Please follow the steps in our documentation to enable e-mail notifications if you want to receive the related email notification for this thread.