• Microsoft Paint supports both local and cloud image generation;
• Paint and Photos also ship local AI models;
• The two apps send the prompt to a remote server for moderation;
• The server returns a GUID along with the moderated prompt;
• The GUID is embedded into the locally generated image as an invisible watermark;
• A separate visible-watermark setting does not control this invisible watermark;
• On Copilot+ PCs, image generation is local but prompt moderation remains remote;
• Microsoft discloses that Paint adds C2PA metadata to AI-generated images;
• AI-generated image saves limited to C2PA-preserving formats: PNG, JPEG, GIF, and .paint .