Microsoft has started rolling out AI-powered contextual actions directly within File Explorer's right-click menu, offering image editing and web search capabilities without leaving the file browser. The feature arrives as part of Windows 11 Insider Preview Build 27938, released to the Canary Channel on September 8, 2025 — the earliest testing ring where Microsoft experiments with platform-level changes that may or may not ship broadly.

Build 27938 marks a significant step in Microsoft's strategy to weave generative AI into the core OS workflow. Instead of opening a separate app to remove a photo background or search for a product via an image, users can now right-click a .jpg or .png and select an action like "Blur Background" or "Bing Visual Search" from a new "AI actions" submenu. The build also introduces a privacy settings page that lets users see which third-party applications have used Windows-provided generative AI models, and it revives the long-requested system clock with seconds in the notification area.

The release is experimental — Canary builds are not serviced and can be unstable — so Microsoft advises installing it only on test devices. Insiders who jump in should expect known issues like upgrade rollbacks, audio driver glitches, and developer tooling compatibility problems. But for those willing to tolerate the rough edges, Build 27938 offers a tangible preview of how AI might soon become a first-class utility inside File Explorer.

What's New in Build 27938

The build introduces three headline features and a collection of fixes:

  • AI actions in File Explorer – A new right-click context menu entry for supported image files (.jpg, .jpeg, .png) that provides quick access to Bing Visual Search, Blur Background (via Photos), Erase Objects (Photos' generative erase), and Remove Background (Paint's automatic cutout).
  • Bigger clock with seconds – A toggle under Settings > Time & language > Date & time enables a larger clock that displays seconds above the calendar, a feature familiar to Windows 10 users.
  • Generative AI privacy controls – A new Settings page (Privacy & security > Text and image generation) lists third-party apps that recently used Windows-provided generative AI models and provides toggles to block app access.
  • Fixes and improvements – Addresses File Explorer color rendering issues, thumbnail generation for video metadata, WMI scanning performance, and Task Manager reliability. Microsoft also notes a range of known issues, including upgrade rollbacks with specific error codes, audio device driver problems (ACPI Audio Compositor showing a yellow exclamation mark), PIX on Windows GPU capture playback failures, and graphics flicker on some hardware.

The return of the seconds display in the notification area clock may seem minor, but it's a highly requested feature from power users who rely on precise timekeeping — stock traders, developers monitoring build processes, or anyone who needs to coordinate to the second. Microsoft had removed the seconds display in Windows 11's initial design, citing performance concerns; this Canary toggle suggests the company has optimized the rendering sufficiently to reintroduce it as an option.

AI Actions in File Explorer: How They Work

AI actions are context-sensitive shortcuts that appear when you right-click an image file. Instead of launching an editing app first, you choose an AI action, and Windows automatically hands the file to the appropriate tool — Photos or Paint — often with the edit already initiated. For web search, it sends the image to Bing Visual Search.

The four launch actions cover common image tasks:

  • Bing Visual Search: Uses the image as a search input to find visually similar images, product listings, landmarks, or extract text.
  • Blur Background: Opens the Photos app and automatically applies a background blur around the detected subject. Users can adjust blur intensity and use a brush to manually refine the mask.
  • Erase Objects: Invokes Photos' generative erase feature to remove selected objects or distractions from the image.
  • Remove Background: Launches Paint and uses its automatic background removal to create a clean cutout of the subject.

All actions work on .jpg, .jpeg, and .png files. The submenu is clearly labeled "AI actions," making it discoverable even for casual users. Microsoft's goal is to keep you "in your flow": fewer clicks, fewer app switches, and less time navigating import dialogs.

The Productivity Angle

The productivity upside is immediate for anyone who frequently performs lightweight image edits. Removing a background or blurring a face before sharing a screenshot is now a one-click operation from the folder where the file lives. For power users who iterate through batches of images — bloggers, social media managers, UI designers — this eliminates the friction of opening a dedicated editor for quick tweaks.

More importantly, by placing AI tools inside the file manager, Microsoft is normalizing AI as a fundamental OS capability rather than something buried in a separate application. The unification of editing and search actions under one menu also simplifies the mental model: right-click, choose what you want to do.

Design and UX Considerations

While the convenience is welcome, integrating AI into the context menu raises valid concerns about menu clutter. File Explorer's right-click context menu is already a crowded space, and adding another nested submenu — even one with only four entries today — risks overwhelming users. Microsoft will need to provide customization options, such as the ability to hide specific AI actions or disable the submenu entirely, ideally through Settings or a Group Policy for enterprise environments.

Discoverability is another double-edged sword. The "AI actions" label is straightforward, but users unfamiliar with the capabilities might hesitate to click or misunderstand what the actions do. Clear tooltips and first-run guidance will be essential.

Consistency across apps also matters. Because the actions delegate to Photos and Paint, the experience depends on those apps being up to date. If an app can't perform the requested action — for example, if generative erase isn't available in an older version of Photos — the user might see an error or a degraded result, undermining trust.

Generative AI Privacy Settings

Build 27938 introduces a new privacy dashboard at Settings > Privacy & security > Text and image generation. This page lists third-party applications that have recently used Windows-provided generative AI models and offers per-app toggles to block future access.

This is a meaningful transparency step. Windows is beginning to expose when and which apps tap into system-level AI models, giving users a window into background AI activity. However, several important questions remain unanswered in this Canary build:

  • Where does processing happen? The settings page indicates Windows-provided models, but it doesn't specify whether the AI actions in File Explorer run locally on the device, in Microsoft's cloud, or a mix of both. Local processing would reduce privacy risks and latency but requires capable hardware.
  • What data leaves the device? For actions like Bing Visual Search, the image obviously must be transmitted to Microsoft's servers. For local edits like background removal, it's unclear if any metadata or thumbnails are sent for telemetry. The build notes do not detail data retention policies or network activity.
  • Can enterprises audit this? The privacy page only covers third-party app usage. If a first-party feature like the File Explorer actions transmits images to the cloud, that might not be visible here. IT administrators will demand more comprehensive logging and control.

Microsoft has made a positive initial move, but for AI actions to be trusted in sensitive environments, the company must publish detailed documentation on data flows and offer granular controls — ideally per-action toggles and network-use indicators.

Known Issues and Installation Risks

Canary Channel builds are deliberately raw, and 27938 is no exception. Before installing, Insiders should note:

  • Upgrade rollbacks: Some devices will fail to install the build and roll back automatically, with specific error codes reported (Microsoft is investigating but has not yet issued a fix). Retrying may lead to repeated rollback loops.
  • Audio driver problems: After upgrading, certain devices show an "ACPI Audio Compositor" device with a yellow exclamation mark in Device Manager. The workaround is to manually update the driver and select the most recent dated driver from the list.
  • Developer tooling: PIX on Windows cannot play back GPU captures on this build. Microsoft says a PIX update is in the works.
  • Graphics flicker: Some hardware configurations experience visual regressions and screen flicker.

Production devices should avoid Canary builds entirely. If you do test, create a full system backup or use a virtual machine, and be prepared to clean install if you need to leave the Canary Channel.

How to Try AI Actions

For Insiders willing to brave the experiment:

  1. Enroll your device in the Windows Insider Program and select the Canary Channel. (Reminder: leaving Canary later requires a clean Windows 11 installation.)
  2. Update to Build 27938 via Windows Update.
  3. Navigate to any folder containing .jpg, .jpeg, or .png files.
  4. Right-click an image file and look for the "AI actions" submenu.
  5. Choose one of the four actions: Bing Visual Search, Blur Background, Erase Objects, or Remove Background.
  6. If you encounter the audio driver issue, open Device Manager, locate the device with the yellow warning, update the driver, and manually pick the most recent dated driver from the list.

To review and control background AI model usage, head to Settings > Privacy & security > Text and image generation. Toggle off any app you don't want accessing generative AI models.

For Developers and IT Administrators

Developers should watch for future SDK announcements. This build signals that Microsoft is building OS-level AI APIs that apps can consume. If your app uses generative models, ensure it registers with the Windows AI reporting surface so users can see and control its activity. Test early on Canary builds to catch compatibility issues, especially with graphics and driver-dependent tooling like PIX.

IT administrators should block Canary builds on managed endpoints. These releases skip many enterprise validation steps and can introduce security or compliance headaches. However, it's wise to start evaluating the privacy and licensing implications now. Upcoming AI actions for Office files — document summarization, list creation — are expected to be gated behind Copilot for Microsoft 365 licensing for commercial customers, with consumer access coming later. Plan for Group Policy or MDM controls that may lag the initial rollout.

The Bigger Picture: Windows 11's AI Roadmap

Build 27938 is a milestone not because of the features themselves, but because of where they're placed. Putting AI inside File Explorer is Microsoft's clearest signal yet that it views AI as a horizontal OS capability, not a bolt-on app. This follows the addition of Copilot to the taskbar and AI-powered features in Paint and Photos, but now the integration goes deeper — right into the file management workflow.

If executed well, this approach could redefine how users interact with files: a right-click becomes a gateway to instant editing, content understanding, and visual search. Combined with the new privacy dashboard, Microsoft seems to be trying to balance utility with transparency. But the balance is delicate. Without clear data handling policies, the risk of misuse or accidental data exposure could erode trust quickly.

Licensing fragmentation looms as another concern. If document-based AI actions remain tied to paid Copilot subscriptions, consumers and small businesses might see a disjointed experience — image edits work for everyone, but summarizing a PDF requires a corporate license. That could create confusion and frustration.

Conclusion

Build 27938 offers a tantalizing glimpse of an AI-first File Explorer, where common image tasks are one click away. The productivity gains are real, and the inclusion of a generative AI privacy page shows Microsoft is thinking — at least partially — about user control. But this is still an early Canary build, replete with installation risks and unanswered privacy questions. For Insiders, it's an experiment worth trying on a spare machine. For everyone else, it's a preview of what's coming: an operating system that gradually blurs the line between file management and intelligent assistance.

The verdict: promising but provisional. As Microsoft iterates, the community's feedback will determine whether AI actions become an indispensable productivity layer or a menu item users learn to ignore.