Auditing and Mitigating Privacy Leakage in Cloud-Edge Collaborative Decoding

Applications such as personalized assistance and proprietary document analysis require large language models (LLMs) to generate outputs from private data. Yet powerful LLMs typically cannot be deployed on the resource-constrained devices where private data resides, and uploading private data to cloud-hosted LLMs exposes sensitive information. Recent work addresses this tension with a cloud-edge collaborative decoding paradigm, where private data are kept on the edge with a small language model (SLM) producing next-token distributions, which are fused with predictions from a cloud LLM operating solely on public data. In this paper, we systematically analyze the privacy risks of such a paradigm with a novel evaluation framework using constructed QA datasets, which show that such collaboration can expose substantial private-context information. To address such privacy leakage, we propose CoVeil, a defense mechanism which dynamically optimizes transmitted signals to suppress leakage during decoding time while preserving the collaborative quality. Extensive evaluations demonstrate that CoVeil consistently improves the privacy-utility trade-off over existing baselines by reducing data leakage by up to 87.2%, with minimal accuracy loss.