Reverse-engineering by developer Xusheng Li found that Microsoft Paint and Photos embed a server-provisioned invisible watermark in AI-generated images. Even when Paint uses a local Stable Diffusion model on an AI PC, it sends the user's prompt and selected style to Microsoft for moderation; the service returns a modified prompt, generation ID, and a watermark identifier.
The blind watermark embeds a 16-byte GUID-derived value into image pixels and is separate from the visible, user-toggleable Copilot watermark. Microsoft also attaches C2PA Content Credentials, creating both pixel-level and metadata-based provenance records. Paint treats successful invisible-watermark insertion as mandatory and fails image generation if it cannot add one, while Photos logs the failure but still delivers the generated image.

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Article 50 transparency requirements of the EU AI Act took effect, a provision the reporting suggests may relate to watermarking of AI-generated content.
Reverse-engineering researcher Xusheng Li reported that Microsoft Paint and Photos embed a server-provisioned GUID-derived invisible watermark in AI-generated images, alongside C2PA Content Credentials. The findings showed Paint fails image generation if blind-watermark insertion fails, while Photos logs the failure but still returns the image.
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