The new model will only include standalone labels and sublabels. Parent labels will be replaced by label groups, which act as organizational containers. These groups cannot be applied to content and have no actions or scope, but they retain color and priority for visual organization. Hopefully, this change will make it much easier to move labels around and make other changes in production: for example, converting a standalone label into a sublabel or moving sublabels between groups without breaking dependencies.
From my experience, this update solves one of the biggest challenges in large environments: rigid label hierarchies. The new dynamic model gives admins the agility they need to adapt quickly as compliance and business needs evolve.
For admins, migration will be quick and simple. Eligible tenants will see a manual migration wizard in the Purview portal. After migration, you’ll have full flexibility to reorganize labels. End users won’t notice any changes in how labels appear or work.
Originally planned for July 2025, the Public Preview has been pushed to December 2025, with General Availability to be announced later. Because timelines can shift, I strongly recommend monitoring the Microsoft 365 Roadmap ID 386900 for the latest updates.
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