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Microsoft 365 encrypts data both in transit (using Transport Layer Security) and at rest (using BitLocker and advanced file-level encryption).
This is the most direct method for organizations with a Volume Licensing agreement. This is where you will find official ISO files for various Office products.
Unlike older versions of Office (like 2010 or 2016), Microsoft does not distribute a "Master ISO" for Office 365 that you install and activate with a static key.