"Disclosing an IP address" maybe a matter of the medium of comms being inadvertently TCP/IP, if MS does not log or store the IP in a meaningful/reversible way, are they processing PII?
in the Google fonts CDN the court ruled that: it's irrelevant if the website or Google had the opportunity to link the IP address to the user. the mere possibility of this is enough to consider it as protected PII.
Question is whether Google Fonts CDN/server was storing the IP address or not. Linking to a user is secondary. If a server does not log or store raw IPs in the first place, where's the fault?
My man you are arguing with an established case verdict.
https://rewis.io/urteile/urteil/lhm-20-01-2022-3-o-1749320/
The wording that is irrelevant what Google does with the IP (just the theoretical possibility of misuse is enough) is in the case verdict.
Per Wikipedia Germany's legal system doesn't have the concept of binding precedent. (And even if it did in no country is the decision of a trial court binding precedent).