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Add-on Copilot and work AI

Microsoft Copilot

Microsoft 365 Copilot, now named Microsoft Copilot on Microsoft's licensing pages, is the paid AI assistant for work in Microsoft 365. It grounds answers in a user's emails, files, meetings and chats through Microsoft Graph and Work IQ, and works inside Word, Excel, PowerPoint, Outlook, Teams and the Copilot app.1

Also known as Microsoft 365 Copilot, Microsoft 365 Copilot (Premium), Microsoft 365 Copilot app, Microsoft Copilot Business, Microsoft 365 Copilot Business

Intended for
Knowledge workers using Microsoft 365, IT and Microsoft 365 administrators, Security and compliance teams, Business leaders planning AI adoption
Runs on
Microsoft 365 cloud service (SaaS), Commercial tenants, US Government clouds (GCC, GCC High, DoD) as an add-on, with feature differences, Education tenants2
Official Microsoft product page (opens in a new tab) Official documentation (opens in a new tab)

At a glance

What is it?
Microsoft 365 Copilot is a per-user add-on license (also included in Microsoft 365 E7) that turns on the full Copilot experience across Microsoft 365. Microsoft's Learn pages now say that Microsoft 365 Copilot is named Microsoft Copilot and that the Microsoft 365 Copilot app is called Microsoft Copilot, with copilot.cloud.microsoft as the main address; product pages and in-app labels still use both names during the transition. Learn describes four experiences: Copilot Chat (Basic), Microsoft 365 Copilot (Basic) for users without the add-on, Microsoft 365 Copilot (Premium) for licensed users, and usage-based capabilities such as Copilot Cowork and Copilot Code on top of Premium.34
What does it do?
A licensed user chats with Copilot in the Microsoft Copilot app or inside Word, Excel, PowerPoint, Outlook, OneNote and Teams. Copilot takes the prompt, retrieves relevant work content the user can already access through Microsoft Graph, Work IQ and semantic indexing, adds web results where web search is allowed, and sends the grounded prompt to a language model chosen by a router. It drafts and summarizes documents and mail, analyzes spreadsheets, builds presentations, recaps meetings and runs agents. Admins get usage reports, Copilot controls in the Microsoft 365 admin center and SharePoint Advanced Management to reduce oversharing.3
Who needs it?
Organizations already on an eligible Microsoft 365 or Office 365 plan whose staff spend much of their day in mail, meetings and documents and need answers that combine those sources. Microsoft sells Copilot as an add-on for commercial, US Government and education plans, as Microsoft Copilot Business for organizations with up to 300 users, and inside Microsoft 365 E7. IT and compliance teams are involved because Copilot inherits existing permissions and labels.2
What does it need?235
  • An eligible base plan, for example Microsoft 365 E3 or E5, Business Basic, Standard or Premium, Office 365 E1, E3 or E5, F1 or F3, or a qualifying Teams, Exchange, SharePoint or OneDrive plan (or Micr
  • Microsoft Entra ID work accounts for users, so Enterprise Data Protection applies
  • Network access to *.cloud.microsoft and the Microsoft Copilot endpoints, with proxies, firewalls and Conditional Access not blocking copilot.cloud.microsoft
  • Supported Microsoft 365 apps; for Teams meeting recaps after the meeting, transcription must be on
  • A review of SharePoint and OneDrive oversharing before rollout, since Copilot follows existing permissions
What it is not
It is not the same as Microsoft Copilot Chat: Copilot Chat (Basic) comes with eligible Microsoft 365 licenses at no extra charge but is mainly web grounded and cannot reach Microsoft Graph or Work IQ. It is not the consumer Copilot app for personal Microsoft accounts. It does not grant access to anything a user cannot already open; it surfaces whatever permissions allow. It is also separate from GitHub Copilot, Microsoft Security Copilot and Copilot Studio, which Microsoft licenses independently.36

Availability and licensing. Generally available. Microsoft Copilot is sold with Microsoft 365 E7 or as an add-on for eligible commercial, US Government and education plans; Microsoft Copilot Business is an annual add-on for up to 300 users on Business plans. Prices checked 26 Oct 2026 on Microsoft US pages: enterprise $30.00 per user per month, paid yearly; Copilot Business add-on $21.00 list, shown at $18.00 per user per month (first year, annual, existing customers) under an offer running 1 Jul to 31 Dec 2026. The unified Microsoft Copilot app began broad rollout to commercial customers in September 2026.478

The problem it solves

Information at work is spread across mailboxes, chats, meeting recordings, SharePoint sites and OneDrive folders. Finding the latest decision or preparing for a meeting means searching several places and reading long threads.

Microsoft 365 Copilot answers this by grounding a language model in the user's own work data through Microsoft Graph and Work IQ, inside the apps people already use. The catch is data hygiene: because Copilot respects existing permissions, overshared content becomes easier to find, which is why Microsoft bundles SharePoint Advanced Management and points customers to Purview.

How it works

Microsoft documents the following flow:

  • Entry points: the Microsoft Copilot app (web, desktop, mobile) at copilot.cloud.microsoft, Copilot in Word, Excel, PowerPoint, OneNote, Outlook and Teams, and Copilot Chat in Edge.
  • Orchestrator: processes the prompt, runs Responsible AI checks and logs the interaction for auditing and eDiscovery. Copilot Chat uses the same orchestrator.
  • Grounding: Microsoft Graph adds the user's emails, files, meetings, calendars, chats and relationships; Work IQ is the intelligence layer that lets Copilot and agents reason over organizational data and tools; semantic indexing and Copilot Search improve retrieval; web grounding uses Bing when allowed.
  • Models: a real-time router chooses between fast and deeper reasoning models; Anthropic models are available as subprocessors in applicable licensed experiences.
  • Controls: access stays scoped to user permissions, with Enterprise Data Protection, the EU Data Boundary, Purview and SharePoint Advanced Management.139
Microsoft Copilot architecture: components by layer and how they connectCopilot & businessappsAgents & automationAI models & platformData & analyticsSecurity, identity &governanceMicrosoft 365 apps (Word, Excel, PowerPoint, Outlook, OneNote, Teams): Where users prompt Copilot inside their documents, mail and meetingsMicrosoft 365 apps (Word,Excel, PowerPoint, Outlook,…Microsoft Copilot app (copilot.cloud.microsoft): Standalone chat on web, desktop and mobile, formerly the Microsoft 365 Copilot appMicrosoft Copilot app(copilot.cloud.microsoft)Agents and Copilot Cowork: Scoped assistants and usage-billed multi-step task executionAgents and Copilot CoworkCopilot orchestrator: Processes prompts, runs Responsible AI checks, grounds the prompt and logs the interactionCopilot orchestratorLanguage models with a real-time router: Generates responses; Auto, Quick response and Think deeper modesLanguage models with areal-time routerMicrosoft Graph and semantic indexing: Supplies permission-trimmed emails, files, meetings, chats and relationshipsMicrosoft Graph and semanticindexingWork IQ: Intelligence layer that lets Copilot and agents reason over organizational data and toolsWork IQWeb grounding (Bing): Adds current public web results when the web search policy allowsWeb grounding (Bing)Purview, SharePoint Advanced Management and Copilot controls: Labeling, oversharing cleanup, prompt review, admin settings and usage reportsPurview, SharePoint AdvancedManagement and Copilot…
Diagram as a list

  1. Copilot & business apps

    • Microsoft 365 apps (Word, Excel, PowerPoint, Outlook, OneNote, Teams)Where users prompt Copilot inside their documents, mail and meetingsConnects to Copilot orchestrator
    • Microsoft Copilot app (copilot.cloud.microsoft)Standalone chat on web, desktop and mobile, formerly the Microsoft 365 Copilot appConnects to Copilot orchestrator

  2. Agents & automation

    • Agents and Copilot CoworkScoped assistants and usage-billed multi-step task execution

  3. AI models & platform

    • Copilot orchestratorProcesses prompts, runs Responsible AI checks, grounds the prompt and logs the interaction
    • Language models with a real-time routerGenerates responses; Auto, Quick response and Think deeper modes

  4. Data & analytics

    • Microsoft Graph and semantic indexingSupplies permission-trimmed emails, files, meetings, chats and relationships
    • Work IQIntelligence layer that lets Copilot and agents reason over organizational data and toolsConnects to Microsoft Graph and semantic indexing
    • Web grounding (Bing)Adds current public web results when the web search policy allows

  5. Security, identity & governance

    • Purview, SharePoint Advanced Management and Copilot controlsLabeling, oversharing cleanup, prompt review, admin settings and usage reportsConnects to Microsoft Graph and semantic indexing
Components and connections as documented by Microsoft.3

Capabilities

  • Grounding in work data3

    With the Premium license, answers draw on the web plus the user's emails, files, meetings, calendars, chats and organizational relationships through Microsoft Graph, Work IQ, Copilot Search and semantic indexing.

    Why it matters: Users can ask questions that span several sources without uploading files by hand.

    Limits: Copilot only sees content the user already has permission to open, so overshared sites surface in answers too. Work IQ can be switched off, and then answers lose work context.

  • Copilot inside the Office apps3

    Drafting, rewriting and summarizing in Word, analysis and formulas in Excel, deck creation and editing in PowerPoint, mail drafting and thread summaries in Outlook, plans in OneNote, and meeting recaps and action items in Teams.

    Why it matters: The assistant works where documents and meetings already live.

    Limits: Users without the add-on get standard access that depends on service capacity; the full in-app experience with priority access needs the Premium license.

  • Agents with web and work data39

    Premium users can use agents, which Microsoft describes as scoped versions of Copilot that can automate business processes, grounded in both web and work data.

    Why it matters: Teams can package a repeatable task, such as HR questions or sales preparation, into an agent instead of writing long prompts each time.

    Limits: Agents built outside the Premium license, and custom or third-party agents that call the Work IQ API, are billed by usage.

  • Model choice and routing3

    By default a real-time router picks the model per prompt (Auto). Users can choose Quick response or Think deeper in the model selector. Anthropic models are offered as subprocessors in applicable licensed experiences.

    Why it matters: Simple questions return fast, and complex questions get a reasoning model without the user picking one.

    Limits: Anthropic models are not on for all users by default, and the options change as Microsoft adds models.

  • Data protection and admin controls3

    Enterprise Data Protection covers prompts and responses for Entra ID sign-ins, EU traffic stays inside the EU Data Boundary, and Premium adds SharePoint Advanced Management, Purview labeling and prompt review, usage reports and advanced admin analytics.

    Why it matters: Security and compliance teams keep the controls they already use for Exchange and SharePoint.

    Limits: Worldwide traffic can be processed in other regions at peak load, and web search queries sent to Bing are handled under separate terms.

  • Usage-based Cowork and Copilot Code310

    On top of the Premium license, Copilot Cowork carries out multi-step tasks across Microsoft 365 on the user's behalf, and Microsoft Copilot Code helps build and automate code with natural language. Both are billed by consumption.

    Why it matters: Long-running work can be handed off rather than done prompt by prompt.

    Limits: Copilot Code is in the Frontier preview program. Cowork was announced on 9 March 2026 as a research preview, and both need a Premium license plus usage-based billing.

Practical use cases

Managers lose hours catching up on long email threads and meetings they missed.
Approach
License the managers for Microsoft 365 Copilot and have them ask for summaries of threads, meeting recaps and open action items across mail, chats and transcripts.
Role of Microsoft Copilot
Copilot retrieves the relevant work content through Microsoft Graph and Work IQ and summarizes it.
Data, infrastructure and skills
Copilot licenses, Teams transcription for meeting recaps, and permissions that reflect who should see what.
Type of benefit
Time saved on information retrieval
Caveats
Recaps after a meeting need transcription; answers are only as complete as the content the user can access.
First step
Pilot with one team for a month and compare their weekly catch-up routine before and after.
A company wants AI in Office apps but worries that Copilot will expose overshared files.
Approach
Before assigning licenses, use SharePoint Advanced Management and restricted content discovery to find and fix overshared sites, and apply Purview sensitivity labels.
Role of Microsoft Copilot
Copilot respects existing permissions and labels, so cleanup work defines what it can surface.
Data, infrastructure and skills
SharePoint Advanced Management (included with the Copilot license) and at least core Purview capabilities.
Type of benefit
Risk reduction
Caveats
Automatic labeling and wider DLP coverage need E5 or E7 level Purview; E3 has manual labeling and core DLP.
First step
Run an oversharing report on the most widely shared SharePoint sites.
Analysts repeat the same research and drafting steps for every client brief.
Approach
Give them Premium licenses and an agent tuned to the brief format, grounded in the team's SharePoint library and the web.
Role of Microsoft Copilot
Copilot runs the agent with web and work data and drafts the brief in Word.
Data, infrastructure and skills
Premium licenses and a curated SharePoint source.
Type of benefit
Consistency and speed of drafting
Caveats
Drafts need human review; custom or third-party agents that call the Work IQ API are billed by usage.
First step
Build one agent with Agent Builder or Copilot Studio and test it on three past briefs.

Who uses it

Works with

Requires

  • Microsoft EntraEnterprise Data Protection applies when users sign in with Microsoft Entra accounts.

Optional integration

  • Microsoft TeamsCopilot runs in Teams meetings, events and calls for licensed users, and Teams meeting summaries are part of the in-app features.

Complementary tools

  • Microsoft Copilot StudioA Copilot license lets users build Copilot Studio agents on the GitHub Copilot harness, and licensed use of agents in Copilot Chat, Teams or SharePoint is zero-rated for some features.
  • Microsoft PurviewPurview classifies and labels data, helps prevent leakage and reviews Copilot prompts and responses.
  • Windows 11 and Copilot+ PCsMicrosoft 365 Copilot runs on Windows 11 but needs its own per-user license.

Same family

  • Microsoft Copilot ChatLearn presents Copilot Chat (Basic) as the baseline tier beneath the paid Microsoft Copilot license.
  • Microsoft 365 E7E7 includes Microsoft Copilot (formerly Microsoft 365 Copilot).

Optional integration for

  • Microsoft TeamsCopilot works in Teams meetings, events and calls for licensed users.
  • Azure Maia and Azure CobaltMicrosoft states Maia 200 serves Microsoft Copilot and built-in AI features in Teams, Copilot and Cowork.
  • Microsoft Copilot StudioAgents publish to Microsoft Copilot; a Copilot license covers GitHub Copilot harness agents and zero-rates some use in Copilot Chat, Teams and SharePoint.
  • Microsoft PurviewPurview labels, DLP, audit, eDiscovery and retention apply to Microsoft 365 Copilot interactions.
  • Microsoft Dynamics 365Sales in Microsoft 365 Copilot and Service in Microsoft 365 Copilot bring CRM data into Microsoft 365.
  • Microsoft 365 Agents SDKSDK agents run as custom engine agents in Microsoft 365 Copilot.
  • Microsoft Foundry Agent ServiceAgents can be published to Microsoft Copilot (the renamed Microsoft 365 Copilot app).

Relationship labels follow Microsoft's documentation. "Alternative approaches" does not mean one is better: each profile says when it fits.

Compared with

Getting started

  1. Check eligibility

    Confirm each target user has an eligible base plan, or plan for Microsoft 365 E7, and decide between the enterprise add-on and Microsoft Copilot Business for organizations up to 300 users.

    Check: The Microsoft Copilot service plan diagnostic tool reports the user as eligible.

  2. Prepare the network

    Allow *.cloud.microsoft and the Microsoft Copilot endpoints, and make sure Conditional Access, proxies and app-control policies do not block copilot.cloud.microsoft.

    Check: A test user can open copilot.cloud.microsoft with a work account and sees the Work label and green shield.

  3. Reduce oversharing

    Use SharePoint Advanced Management and restricted content discovery to review widely shared sites, and apply Purview labels to sensitive content.

    Check: The sites flagged as overshared have owners and corrected permissions.

  4. Assign licenses to a pilot group

    Assign Copilot licenses in the Microsoft 365 admin center and configure Copilot controls, such as web search and agent settings.

    Check: Pilot users see the Premium label in Word, Excel, PowerPoint and OneNote.

  5. Measure adoption

    Use the Microsoft Copilot usage report and the Copilot Chat usage report, and organizational messages to nudge users.

    Check: Active-user and prompt counts appear for the pilot group in the reports.

Official resources

Deciding whether you need it?

Three free tools apply Microsoft's own published guidance to your situation, and say when Microsoft Copilot or any new technology is not needed.

Sources

Each statement above links to the source it comes from. Labels say who reported it.

  1. Microsoft Copilot Chat privacy and protections (Microsoft Learn) (opens in a new tab) Microsoft · Vendor-reported
  2. License options for Microsoft Copilot (Microsoft Learn) (opens in a new tab) Microsoft · Vendor-reported
  3. What is Microsoft Copilot? (opens in a new tab) Microsoft · Vendor-reported · link checked 27 Oct 2026
  4. Microsoft Copilot: AI built for work (product page) (opens in a new tab) Microsoft · Vendor-reported · link checked 27 Oct 2026
  5. Manage Microsoft Copilot in Teams meetings and events (Microsoft Learn) (opens in a new tab) Microsoft · Vendor-reported
  6. Overview of Microsoft Copilot Chat (opens in a new tab) Microsoft · Vendor-reported · link checked 27 Oct 2026
  7. Microsoft Copilot plans and pricing for business (opens in a new tab) Microsoft · Vendor-reported
  8. Deploy the unified Microsoft Copilot application (Microsoft Learn) (opens in a new tab) Microsoft · Vendor-reported
  9. Work IQ overview (Microsoft Learn) (opens in a new tab) Microsoft · Vendor-reported
  10. Introducing the First Frontier Suite built on Intelligence + Trust (Official Microsoft Blog, 9 March 2026) (opens in a new tab) Microsoft · Vendor-reported · link checked 27 Oct 2026
  11. Compare Copilot in E3, E5, and E7 (Microsoft Learn) (opens in a new tab) Microsoft · Vendor-reported · link checked 27 Oct 2026

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