local isolation

Microsoft's AI agent security is structured around three execution boundaries: local process isolation, session isolation, and cloud-based Windows 365 for Agents. The introduction of Microsoft Execution Containers (MXC) on June 2, 2026, enhances local isolation through two methods: process isolation, which restricts an agent's access to specific files and networks, and session isolation, which separates an agent from the user's interactive environment. The MXC framework includes policies for filesystem access, network traffic, and user-interface controls, with an audit mode that disables sandbox security for analysis purposes. The choice between local isolation and Windows 365 for Agents depends on the agent's execution environment, with local isolation providing limited access and Windows 365 offering a completely separate cloud environment. MXC is in early preview, while Windows 365 for Agents is generally available.