What
Sometimes a remote service refuses a request with a 403, meaning access denied. If the refusal says the resource is restricted for compliance or zero data retention, Claude Code now treats the feature as unavailable because of a compliance restriction. Zero data retention is an arrangement where Anthropic does not keep your data. Before, it treated these refusals as a failed login. Other 403 refusals are still treated as unauthorised. This handling sits alongside directory sync.
Why
If your organisation is compliance-restricted, you should now see a restriction message rather than an authentication failure that points you in the wrong direction.
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Exactly which remote feature this applies to is not known.