No, this not some sort of April Fool's joke. The following paragraph is a doozy too:
"WITHOUT LIMITING SECTION 12 OF THE MICROSOFT SERVICES AGREEMENT IN ANY WAY, BUT FOR THE SAKE OF CLARITY, WE DO NOT MAKE ANY WARRANTY OR REPRESENTATION OF ANY KIND ABOUT COPILOT. For example, we can’t promise that any Copilot’s Responses won’t infringe someone else’s rights (like their copyrights, trademarks, or rights of privacy) or defame them. You are solely responsible if you choose to publish or share Copilot’s Responses publicly or with any other person."
They are covering their arses, but the law has been on their side around copyright infringement of others' work i.e. if I contract with an illustrator to make a logo and they copy someone's work and I publish stuff with 'my' logo (completely unaware of the infringement), the original IP owner can sue me. My only legal recourse is to sue the illustrator in turn.