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How can we improve compliance or protect your users better in Office 365?

Split O365 labels for Protection from O365 labels for Retention

Do not integrate Protection settings and Retention settings please.

Retention policies within my organisation are related to data types (or content types), not related to protection. If you use only SharePoint then retention policies can be implemented using SharePoint content types, however when looking wider then SPOL, you can implement Retention policies using O365 labels. Using the O365 label integration with SPOL library settings was a good start.
However integrate O365 labels and AIP labels (as I saw at a recent Ignite session) is not a good idea. If you are going to combine Protection and Retention in ONE label and it's only possible to apply only ONE label to a document or email, then there will be an explosion of labels.
So, my advise: Use the O365 labels for retention only and use the AIP labels together with DLP policies for Protection purposes only.

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