For security reasons, Edge 76+ and Chrome block navigation1 to file:// URLs from non-file:// urls.
If a browser user clicks on a file:// link on an https-delivered webpage, nothing visibly happens. If you open the the Developer Tools console, you’ll see a note: “Not allowed to load local resource: file://host/whatever”.
In contrast, Edge18 (like Internet Explorer before it) allowed pages in your Intranet Zone to navigate to URLs that use the file:// url protocol; only pages in the Internet Zone were blocked from such navigations2.
No option to disable this navigation blocking is available in Chrome or Edge 76+.
What’s the Risk?
The most obvious problem is that the way file:// retrieves content can result in privacy and security problems. Pulling remote resources over file:// can leak your user account information and a hash of your password to the remote site. What makes this extra horrific is that if you log into Windows using an MSA account, the bad guy gets both your global userinfo AND a hash he can try to crack.
Beyond the data leakage risks related to remote file retrieval, other vulnerabilities related to opening local files also exist. Navigating to a local file might result in that file opening in a handler application in a dangerous or unexpected way. The Same Origin Policy for file URIs is poorly defined and inconsistent across browsers, which can result in security problems.
Workaround: IE Mode
Enterprise administrators can configure sites that must navigate to file:// urls to open in IE mode. Like legacy IE itself, IE mode pages in the Intranet zone can navigate to file urls.
Unfortunately, the extension API chrome.webNavigation.onBeforeNavigate does not fire for file:// links that are blocked in HTTP/HTTPS pages, which makes working around this blocking this via an extension difficult.
Necessary but not sufficient
Unfortunately, blocking file:// uris in the browser is a good start, but it’s not complete. There are myriad formats which have the ability to hit the network for file URIs, ranging from Office documents, to emails, to media files, to PDF, MHT, SCF files, etc, and most of them will do so without confirmation.
In an enterprise, the expectation is that the Organization will block outbound SMB at the firewall. When I was working for Chrome and reported this issue to Google’s internal security department, they assured me that this is what they did. I then proved that they were not, in fact, correctly blocking outbound SMB for all employees, and they spun up a response team to go fix their broken firewall rules. In a home environment, the user’s router may or may not block the outbound request.
Various policies are available, but I get the sense that they’re not broadly used.
1 This post covers navigating to file:// uris. Another question which occasionally comes up is “how can I embed a subresource like an image or a script from a file:// URI into my https-served page.” This, you also cannot do, for similar security/privacy reasons. And that’s probably a good thing.
2 Interestingly, some alarmist researchers didn’t realize that this was happening on a per-zone basis, and asserted that IE/Edge would directly leak your credentials from any Internet web page. This is not correct. It is further incorrect in old Edge (Spartan) because Internet-zone web pages run in Internet AppContainers, which lack the Enterprise Authentication permission, which means that they don’t even have your credentials.