If you’re opening a file that is encrypted on SharePoint, you may receive this notification if your admin has enabled sensitivity labels, but not the capability to co-author on such protected documents.
Note: If you're using Microsoft Office as part of a Microsoft 365 or Office 365 subscription, make sure you have the latest updates installed. If you don't, install the latest updates and try opening the file again.
If you see this message and plan to collaborate on this document with others, we strongly recommend you use Office for the web.
You may also receive this notification if you are opening a file uploaded to a SharePoint library protected with Information Rights Management (IRM). In this case, if someone else is editing the file now you might not be able to edit it until they're done.
To stop seeing these notifications
You can tell Office that you just want to always open the file in the desktop app, without being notified about the potential limitations by changing a setting in Office. Note that with this setting enabled you may occasionally have a file open Read-only due to the limitations of coauthoring encrypted files.