Yes, you can have both. A Windows® AI PC lets you tighten privacy and boost productivity at the same time. Set diagnostics to required only, review app permissions, use on-device speech recognition and limit activity history syncing. Then customise Microsoft® Copilot, index only the folders you need and turn on hardware acceleration so the NPU (neural processing unit) handles AI tasks locally.
Key privacy settings to adjust:
- Set diagnostics to "Required" only (not optional)
- Review app permissions regularly
- Enable on-device speech recognition and turn off online speech services
- Limit activity history syncing across devices
Productivity optimisations:
- Customise Copilot for task assistance
- Use local AI processing when possible
- Index only the necessary folders for smart search
- Enable hardware acceleration for AI tasks
Bottom line: On-device AI processing, which uses the NPU in your PC, can handle many sensitive tasks locally without sending data to the cloud. Optional cloud features stay under your control.
Windows AI PCs have changed what a personal computer can do. AI is no longer an add-on or an accessibility feature. It now sits inside the operating system and the hardware itself. Microsoft uses NPUs alongside the CPU (central processing unit) and GPU (graphics processing unit) to make AI processing a core function of your PC.
Many users report big productivity gains. Summarising files, getting content overviews and locating documents can now take seconds. Because on-device AI handles many tasks locally rather than in the cloud, Windows AI PCs suit people whose work calls for tighter security.
Whether you work from a Wellington office, an Auckland co-working space or the kitchen table, the same principle applies. A Windows AI PC works with you to strike a balance. You get better productivity and efficiency without sharing extensive personal data.
Understanding Windows AI PC Privacy and Data Usage
Before adjusting settings, it helps to know how these machines work. AI features rely on input such as audio, video and text, so it's natural to wonder how much data is collected. On-device AI processing works differently from cloud AI. It reads existing files, processes them on the NPU and returns results in real time, rather than uploading them to cloud storage.
Diagnostic and feedback data
A common type of data on Windows AI laptops and PCs is diagnostic reports and feedback. Microsoft uses this data to improve system reliability and performance. You choose how much optional data you share.
What diagnostic data includes:
- System performance metrics
- Feature usage patterns
- Error reports and crash data
- Hardware compatibility information
AI processing model design
Most Windows AI PCs use a hybrid processing model. On-device AI handles real-time tasks that need privacy and speed. Complex requests may use cloud processing.
On-device processing (NPU):
- Speech recognition
- Background blur in video calls
- Real-time translation
- Local file analysis
Cloud processing (optional):
- Complex image generation
- Advanced content creation
- Web-connected queries
This approach lets Microsoft separate functional data from optional telemetry. That separation is why you can control the optional part.
Essential Privacy Settings Configuration
Windows 11 includes built-in privacy controls, and they're easy to find. You can adjust each one to suit your own comfort level. Menu names can vary slightly between Windows 11 versions, so use the search box in Settings if a path looks different on your PC.
1. Telemetry and diagnostics
All operating systems collect some data for diagnostics and improvement. On a Windows AI PC, this setting controls how much data Windows collects. It also separates required data from optional data.
Path: Settings → Privacy & Security → Diagnostics & Feedback
Recommendation: Leave required diagnostics enabled and turn off optional data unless you're troubleshooting a problem. This keeps your PC reliable without unnecessary sharing.
What this controls:
- System performance data sent to Microsoft
- Feature usage statistics
- Error reporting frequency
- Improvement program participation
2. App permissions
Some apps with AI features ask for access to hardware such as the microphone, camera, location or files. You decide which apps get access, and when.
Path: Settings → Privacy & Security → App Permissions
Recommendation: Only grant access to apps with a justified need. For example, a speech-improving AI app can reasonably use the microphone. The same app has no business requesting access to your contacts or other unrelated data.
Permissions to review:
- Camera (video calls, scanning)
- Microphone (voice commands, transcription)
- Location (maps, weather)
- Files and folders (document processing)
- Notifications
3. Windows Copilot data controls
Windows Copilot is an AI assistant that many people use to boost their productivity. However, the app doesn't need extensive access to all your information.
Path: Settings → Privacy & Security → Copilot
Recommendation: Allow basic system context and avoid long-term content history. Think of Copilot as a helper, not a logbook.
Best practices:
- Enable task-focused assistance
- Disable conversation history if working with sensitive data
- Limit access to personal files unless necessary
- Review data retention settings
4. Activity history
Activity history helps you keep track of your work across devices. It falls under optional data collection, so you can turn it off.
Path: Settings → Privacy & Security → Activity History
Recommendation: Keep local history enabled for convenience. Disable cloud syncing if you don't need cross-device tracking.
What this affects:
- Timeline feature in Task View
- Cross-device app continuity
- Microsoft account activity tracking
- Personalised recommendations
5. Speech recognition
Voice features are one of the clearest examples of AI running locally on your NPU.
Path: Settings → Privacy & Security → Speech
Recommendation: Enable on-device speech recognition and disable online speech services if privacy is a priority.
Key distinction:
- On-device: Processes voice commands locally on your PC's NPU
- Online: Sends audio to Microsoft servers for processing (often more accurate but less private)
Privacy Expectations for Kiwi Users
New Zealand's Privacy Act 2020 is the country's main privacy law. According to the Office of the Privacy Commissioner, it applies to almost every person, business and organisation in New Zealand. It sets principles for how personal information is collected, used, stored and shared.
Your device settings sit alongside that law. They give you direct control over what your PC shares in the first place. If you use a work laptop, check your employer's IT policy before changing diagnostics, permissions or encryption settings.
Optimising AI Features for Productivity
Once you know which privacy settings suit you, it's much easier to trust AI-powered apps on your PC.
Windows Copilot
Windows Copilot boosts productivity and accessibility by closing the gap between a question and an answer. When configured well, it summarises text, suggests documents and gives quick overviews. It can also replace trawling through menus and help pages. On Copilot+ PCs, the NPU supports additional Copilot+ experiences.
Best practices:
- Customise Copilot to focus on task help rather than personal content
- Don't fill Copilot chats with personal or sensitive information
- Use Copilot for system commands and general assistance
- Review data sharing settings regularly
Example uses:
- "Switch to dark mode"
- "Show me keyboard shortcuts for [application]"
- "Summarise this document" (when appropriate)
- "Find files modified in the last week"
AI-powered suggestions and recommendations
AI-powered suggestions scan your files to streamline organisational and everyday tasks. For the best results:
Configuration tips:
- Turn off suggestions tied to browsing or external content if they feel intrusive
- Keep system-level recommendations that help with settings or navigation
- Disable personalised ads and content recommendations
Where suggestions appear:
- Start menu recommendations
- Search suggestions
- File Explorer quick access
- Taskbar suggestions
Automation features
AI automation handles repetitive tasks so you can focus on the work in front of you. To get the most from it:
Setup recommendations:
- Set up shortcuts for repetitive actions on your PC
- Choose local automations whenever possible to reduce data exposure
- Use Microsoft Power Automate for advanced workflow automation
- Configure AI-powered clipboard history for frequent copy-paste tasks
Common automations:
- Auto-organise your downloads folder
- Scheduled file backups
- Automated email sorting and responses
- Smart photo organisation
Smart search in Windows
Smart search helps you find files without detailed keywords. That saves time and effort. To get the most from it:
Optimisation steps:
- Index only the folders you actually use regularly
- Exclude large or sensitive directories - this improves both privacy and speed
- Use natural language queries ("photos from last summer")
- Disable web search results if you only need local files
Indexing best practices:
- Include: Documents, Desktop, Pictures (work-related folders)
- Exclude: System folders, temporary files, archived projects
Performance Tuning for AI Workloads
After you've configured your privacy settings, fine-tune performance. AI features don't strain modern systems, but a few adjustments help them run smoothly. If you're still choosing a machine, our AI PC buyer's checklist covers the specs that matter most.
Memory and background apps
Close unnecessary background applications:
- Background apps can use up memory and CPU resources
- Review startup programs: Settings → Apps → Startup
- Disable apps that don't need to launch at startup
- Use Task Manager to monitor resource usage
Storage optimisation
Enable AI model caching:
- Allow AI model caching on fast local storage so features don't repeatedly reload data
- Keep at least 20% of your primary drive free
- Use SSD storage for the best AI performance
- Consider storing large media files on secondary drives
Hardware acceleration
Verify hardware acceleration is enabled:
- Ensure the NPU and GPU handle AI tasks efficiently
- Path: Settings → System → Display → Graphics settings
- Enable "Hardware-accelerated GPU scheduling"
- Check that AI features are using the NPU, not just the CPU
To verify NPU usage:
- Open Task Manager → Performance tab
- Look for NPU utilisation during AI tasks
- Ensure NPU drivers are up to date
Power settings
Optimise your power plan for AI:
- Use the "Balanced" or "High Performance" power plan when using AI features
- Path: Settings → System → Power & battery
- Adjust sleep settings to prevent interruptions during AI processing
- Consider "Best Performance" mode for intensive AI tasks
Security and Compliance Best Practices
Windows also includes built-in protection features that support AI without adding complexity.
Windows Security and AI protection
Windows Security includes Microsoft Defender Antivirus, which uses AI to help detect threats in real time. Leave it enabled to help protect your data from external threats.
Key features:
- Real-time malware detection using AI
- Behavioural analysis of applications
- Cloud-delivered protection (optional but recommended)
- Automatic sample submission for threat analysis
Firewall configuration: If you use Windows Firewall, you can:
- Choose which features connect externally
- Keep track of which applications are using AI-powered tools
- Block unnecessary outbound connections
- Review app network access regularly
Data encryption
Enable BitLocker or device encryption:
- Helps protect data at rest on your storage drive
- Especially important for laptops and portable devices
- Path: Settings → Privacy & Security → Device encryption
- Back up your recovery key securely
Regular security maintenance
Monthly security checklist:
- Update Windows and drivers
- Review app permissions
- Check firewall rules
- Scan for malware with Windows Security
- Review privacy settings after major updates
Daily Usage Best Practices and Quick Optimisation Checklist
Here's a go-to checklist for an optimised PC setup that helps protect your AI-processed data. This isn't a one-time setup. Adapt it as your AI use and security needs change.
Quick setup checklist
Privacy basics:
- Set diagnostics to "Required" only
- Review app permissions monthly
- Enable on-device speech recognition
- Limit activity history syncing across devices
- Disable optional telemetry
- Check your employer's IT policy before changing settings on a work laptop
Productivity essentials:
- Customise Windows Copilot for your workflow
- Optimise search indexing (include only necessary folders)
- Prioritise local AI processing when possible
- Set up automation for repetitive tasks
- Configure smart suggestions appropriately
Security upkeep:
- Enable Windows Security real-time protection
- Configure firewall rules
- Enable storage encryption (BitLocker or device encryption)
- Keep Windows and drivers updated
- Review security settings quarterly
Performance optimisation:
- Disable unnecessary startup programs
- Enable hardware acceleration
- Keep 20% or more of your storage free
- Use the "Balanced" or "High Performance" power plan
- Monitor NPU usage in Task Manager
Common Questions About Windows AI PC Configuration
How can I tell if my Windows privacy settings are working?
In the Privacy & Security section of Windows Settings, you can check which apps have permission to use your hardware and which apps use AI processing. You can also review the Privacy Dashboard on your Microsoft account online to see what data Microsoft has collected.
Verification steps:
- Go to Settings → Privacy & Security
- Check each category (Camera, Microphone, Location and so on)
- Review which apps have access
- Look for "Last accessed" timestamps to see recent usage
- Use Task Manager to monitor network activity by app
Will limiting data collection reduce AI performance on a Windows AI PC?
In most cases, limiting data collection makes little difference to AI performance. Core AI features run on the local NPU and don't need extensive data sharing.
What you're unlikely to lose:
- On-device speech recognition
- Local file search and indexing
- Real-time video effects (background blur)
- Offline AI features
What may be affected:
- Personalised recommendations (improved with more data)
- Cloud-based image generation (requires internet)
- Some Copilot features that rely on usage patterns
- Cross-device activity sync
Even with strict privacy settings, most essential on-device AI capabilities should keep working.
Do I need to keep updating Windows privacy settings?
Yes, but not constantly. Review your Windows privacy settings at these times:
- After major Windows updates (can reset some preferences)
- When installing new AI-powered apps (may request new permissions)
- Quarterly (good general practice)
- When your workflow changes (new job, or projects needing different security levels)
Major Windows updates sometimes introduce new AI features with their own privacy settings, so it's worth checking after each update.
Can I use Windows AI features without a Microsoft account?
Most core Windows AI features work without signing in to a Microsoft account, but some need one.
Works without an account:
- Basic Windows Copilot queries
- On-device speech recognition
- Local file search
- Background effects in video calls
Requires a Microsoft account:
- Copilot conversation history sync
- Cross-device activity tracking
- Microsoft 365 AI features
- Cloud-based content generation
What's the difference between required and optional diagnostics in Windows?
Required diagnostics cover the essential information Windows needs to function. Optional diagnostics give Microsoft more detailed usage information for product improvement.
Required diagnostics:
- Essential system information for Windows to function
- Basic device and hardware info
- Critical error reports
- Security and update data
- Cannot be fully disabled (only minimised)
Optional diagnostics:
- Detailed usage patterns
- Enhanced error reports
- Feature usage statistics
- Inking and typing data
- Can be disabled without affecting core functionality
Does the Privacy Act 2020 cover Windows AI PC settings in New Zealand?
The Privacy Act 2020 is New Zealand's main privacy law. It governs how organisations and individuals collect, use, store and share personal information. Windows privacy settings are separate from the Act, but they give you direct control over which data your PC shares with Microsoft and with apps.
HP Windows AI PC Recommendations
HP offers several Windows AI PCs built with both productivity and privacy in mind:
- HP OmniBook Ultra: Features a dedicated NPU for local AI processing, so many tasks run without cloud dependency.
- HP EliteBook series: Business-grade security features combined with AI capabilities, suited to professionals who need both productivity and data protection.
- HP OmniBook X: Consumer-focused AI features with strong privacy controls, a good fit for home and creative users.
HP Windows AI PCs include:
- Dedicated NPU for on-device AI processing
- Windows 11 with built-in privacy controls
- Hardware-level security features
- Optimised performance for AI workloads
To see how AI PCs fit modern workflows, browse HP's next-gen AI PC range or read our HP OmniBook X comparison guide.
Conclusion
AI processing may feel like it could intrude on your privacy. In practice, a Windows AI PC doesn't ask you to choose between better productivity and information security. The key is knowing how to adjust your settings to match your confidentiality needs while keeping the PC running at its best.
As you use more AI-powered apps and tools, revisit your privacy settings and check for changes. A good rule of thumb is to allow core permissions and adjust optional data collection as you see fit.
Key takeaways:
- On-device AI processing (NPU) supports privacy-focused computing
- Most productivity features work with minimal data sharing
- Regular privacy setting reviews help keep you protected
- Performance and privacy can coexist with the right configuration
Start with the quick checklist above, then fine-tune your settings based on your workflow and security requirements.
