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Cloud application Copilot and work AI

Microsoft Copilot Chat

Microsoft Copilot Chat, formerly Microsoft 365 Copilot Chat, is the secure AI chat included with eligible Microsoft 365 licenses. It is grounded mainly in the web, works on files users provide, runs agents, and carries enterprise data protection when people sign in with a work account.1

Also known as Microsoft 365 Copilot Chat, Copilot Chat (Basic), Microsoft 365 Copilot Chat app

Intended for
All employees with an eligible Microsoft 365 license, IT and Microsoft 365 administrators, Security and compliance teams, Students aged 13 and older in education tenants
Runs on
Microsoft 365 cloud service (SaaS), Web, desktop and mobile apps, Microsoft Edge sidebar, Outlook and Teams, US Government clouds with feature differences (web grounding off by default in some)1
Official Microsoft product page (opens in a new tab) Official documentation (opens in a new tab)

At a glance

What is it?
Copilot Chat (Basic) is the baseline Copilot experience that Microsoft includes with eligible Microsoft 365 work and school licenses, with no Microsoft 365 Copilot add-on required. Microsoft renamed it: Learn now states that Microsoft 365 Copilot Chat is named Microsoft Copilot Chat, and the Microsoft 365 Copilot Chat app is called Microsoft Copilot Chat, reached mainly at copilot.cloud.microsoft. It combines large language models with web grounding and enterprise data protection, and it reaches organizational data only in specific cases: content the user pastes or uploads, content open in supported apps, Copilot Chat in Outlook, and agents that have access to tenant data.12
What does it do?
Users can research and summarize web information, write and rewrite text, analyze uploaded files, create images and talk to agents. In Outlook, Copilot Chat can answer questions over the user's mail, calendar, meetings, chats and a bounded set of files, even without the paid add-on. A model router picks a fast or a deeper reasoning model, or users choose Quick response or Think deeper. Prompts and responses are logged in Exchange for audit and eDiscovery and are not used to train foundation models. Access is standard rather than priority, so features like file upload and image generation depend on service capacity.13
Who needs it?
Organizations that want every eligible employee to have an approved AI chat for work, instead of consumer tools, without buying a Copilot seat for everyone. It suits staff who mostly need web research, drafting and file analysis. It is also the starting point before deciding which users need the paid Microsoft 365 Copilot license.
What does it need?45
  • An eligible Microsoft 365 or Office 365 work or school license (check the Copilot Chat eligibility list on Learn)
  • Users signed in with Microsoft Entra ID work or school accounts, so enterprise data protection applies
  • *.cloud.microsoft allowed in full on proxies and firewalls, with copilot.cloud.microsoft not blocked
  • For pay-as-you-go agents over company data: an admin with the AI Administrator role and, where used, Power Platform admin center access
  • For students: Copilot Chat is available to those aged 13 and older
What it is not
It is not Microsoft 365 Copilot (now Microsoft Copilot): Copilot Chat has no Microsoft Graph, Work IQ or semantic indexing grounding across Microsoft 365, no priority access, and limited agent experiences. Users with Copilot Chat (Basic) do not get Copilot chat inside Word, Excel, PowerPoint and OneNote. It is not the consumer Copilot for personal Microsoft accounts, which has separate chats and protections. Agents that use organizational data are not free: Microsoft includes only declarative agents grounded in instructions and public websites, and other agents are pay-as-you-go.124

Availability and licensing. Generally available and included with eligible Microsoft 365 licenses at no extra cost; no Microsoft 365 Copilot license is required (checked 26 Oct 2026). Agents that use organizational data are billed pay-as-you-go. Microsoft renamed Microsoft 365 Copilot Chat to Microsoft Copilot Chat, and some licenses and screens still show the old name during the transition. Available to students aged 13 and older. Feature availability differs in GCC, GCC High and DoD.13

The problem it solves

Employees already use public AI chat tools, often by pasting work content into services the organization does not control. Blocking them outright tends to push usage elsewhere.

Copilot Chat gives eligible Microsoft 365 users an AI chat under the same data protection terms that cover their Exchange mail and SharePoint files, with prompts logged for audit. It deliberately limits access to company data, so it is safe to turn on broadly, while the paid license adds deep grounding for the people who need it.

How it works

Microsoft describes five steps for each prompt:

  1. Prompt: the user writes in the web app, the Microsoft Copilot app, Edge, Teams or Outlook, and the prompt goes to the same orchestrator Microsoft Copilot uses.
  2. Grounding: if web grounding is on, Copilot sends a few generated search words to Bing, without user or tenant identifiers. Organizational content enters only through the prompt, open content, Copilot Chat in Outlook or an agent.
  3. Model: the grounded prompt goes to one or more language models.
  4. Logging: prompt and response are stored in Exchange for auditing and eDiscovery.
  5. Response: Responsible AI checks run and the answer returns to the user.

Uploaded files are stored in the user's OneDrive for Business under enterprise data protection. EU traffic stays inside the EU Data Boundary, but web queries sent to Bing are not covered by it.3

Microsoft Copilot Chat architecture: components by layer and how they connectCopilot & businessappsAgents & automationAI models & platformData & analyticsSecurity, identity &governanceEntry points (copilot.cloud.microsoft, Microsoft Copilot app, Edge, Outlook, Teams): Where users open Copilot ChatEntry points(copilot.cloud.microsoft,…Agents (included web agents, pay-as-you-go work data agents): Add scoped knowledge, including tenant data for pay-as-you-go agentsAgents (included web agents,pay-as-you-go work data…Copilot orchestrator: Same orchestrator as Microsoft Copilot; runs Responsible AI checks and groundingCopilot orchestratorLanguage models with router: Generate the response; Auto, Quick response and Think deeperLanguage models with routerBing web grounding: Receives short generated search queries without user or tenant identifiersBing web groundingUser-provided and Outlook content: Uploads, open files, and the bounded Outlook mailbox and calendar contextUser-provided and OutlookcontentMicrosoft Entra ID sign-in: Work or school sign-in that turns on enterprise data protectionMicrosoft Entra ID sign-inExchange logging: Stores prompts and responses for audit, retention and eDiscoveryExchange logging
Diagram as a list

  1. Copilot & business apps

    • Entry points (copilot.cloud.microsoft, Microsoft Copilot app, Edge, Outlook, Teams)Where users open Copilot ChatConnects to Copilot orchestrator

  2. Agents & automation

    • Agents (included web agents, pay-as-you-go work data agents)Add scoped knowledge, including tenant data for pay-as-you-go agentsConnects to Copilot orchestrator

  3. AI models & platform

    • Copilot orchestratorSame orchestrator as Microsoft Copilot; runs Responsible AI checks and grounding
    • Language models with routerGenerate the response; Auto, Quick response and Think deeper

  4. Data & analytics

    • Bing web groundingReceives short generated search queries without user or tenant identifiers
    • User-provided and Outlook contentUploads, open files, and the bounded Outlook mailbox and calendar context

  5. Security, identity & governance

    • Microsoft Entra ID sign-inWork or school sign-in that turns on enterprise data protectionConnects to Entry points (copilot.cloud.microsoft, Microsoft Copilot app, Edge, Outlook, Teams)
    • Exchange loggingStores prompts and responses for audit, retention and eDiscovery
Components and connections as documented by Microsoft.1

Capabilities

  • Web-grounded chat with enterprise data protection3

    Answers combine a language model with Bing web results; prompts and responses are processed inside the Microsoft 365 service boundary and covered by the Data Protection Addendum and Product Terms.

    Why it matters: Gives staff an approved alternative to consumer chat tools.

    Limits: Web queries sent to Bing are handled under the Microsoft Services Agreement as an independent controller and are not covered by the EU Data Boundary.

  • Work with user-provided content3

    Users can paste text, upload or drag in files, reference a file with the / menu, or use Copilot Chat with content open in Word, Excel and PowerPoint agents or Edge.

    Why it matters: Covers one-off analysis of a document or spreadsheet without a paid seat.

    Limits: Copilot Chat only sees what the user provides or has open; it does not search across Microsoft 365.

  • Copilot Chat in Outlook3

    In Outlook, eligible users can ask about emails, calendar items, meetings, chats and files in their OneDrive, frequently visited SharePoint sites and files shared with them.

    Why it matters: Inbox triage and meeting preparation become available without the add-on.

    Limits: It uses lexical indexing over a bounded set of content; Work IQ and semantic indexing need a Microsoft Copilot license.

  • Agents2

    Declarative agents grounded in instructions and public websites are included; agents that reach organizational content, such as SharePoint or connector data, run on a pay-as-you-go basis.

    Why it matters: Teams can offer targeted assistants to unlicensed users and pay only for usage.

    Limits: Custom agents with work data incur usage charges, and admins control who can create and use agents.

  • Model selection1

    A real-time router picks the model by default, and users can choose Quick response or Think deeper.

    Why it matters: Routine questions return quickly, complex ones get a reasoning model.

    Limits: Copilot Chat has standard access to models, file upload and image generation, so quality and speed can vary with service capacity.

  • Admin controls and reporting24

    Admins can pin or unpin Copilot Chat, manage image generation and web search, control agent creation, block the app through Integrated Apps, and track adoption in the Copilot Chat usage report.

    Why it matters: IT can roll out or restrict AI chat with existing Microsoft 365 tools.

    Limits: Blocking the Copilot app through Integrated Apps applies tenant-wide, including to licensed users, unless scoped to users or groups.

Practical use cases

Staff paste work documents into public AI chat sites.
Approach
Turn on and pin Copilot Chat for all eligible users and tell them to sign in with their work account; restrict personal-account sign-in with tenant restrictions.
Role of Microsoft Copilot Chat
Copilot Chat provides the sanctioned AI chat under enterprise data protection, with prompts logged.
Data, infrastructure and skills
Eligible Microsoft 365 licenses and Entra ID accounts.
Type of benefit
Risk reduction
Caveats
Web queries to Bing fall under separate terms; users must sign in with the work account to get protection.
First step
Pin Copilot Chat in the Microsoft 365 admin center and publish a short usage guideline.
An organization is unsure how many paid Copilot seats it needs.
Approach
Roll out Copilot Chat broadly first, watch the Copilot Chat usage report, then license the heaviest users who need work-data grounding.
Role of Microsoft Copilot Chat
Copilot Chat builds habits and gives usage data before any add-on purchase.
Data, infrastructure and skills
Access to Microsoft 365 admin center reports.
Type of benefit
Better licensing decisions
Caveats
Usage of Copilot Chat does not show how much users would gain from Graph grounding.
First step
Review 90 days of active users and prompts per user in the report.
Frontline or part-time staff need answers from an HR policy library but have no Copilot license.
Approach
Publish a pay-as-you-go agent grounded in the HR SharePoint site and pin it in Copilot Chat for that group.
Role of Microsoft Copilot Chat
Copilot Chat hosts the agent; usage is billed only when the agent touches tenant data.
Data, infrastructure and skills
A billing setup for pay-as-you-go agents and an AI Administrator to pin the agent.
Type of benefit
Wider access at usage-based cost
Caveats
Costs grow with usage, and admins can pin at most three agents per user.
First step
Build the agent, test it with a small group, then pin it.

Who uses it

Works with

Requires

  • Microsoft EntraEnterprise data protection applies when users sign in with Microsoft Entra work or school accounts.

Optional integration

  • Microsoft TeamsCopilot Chat is available in Teams, managed as a Teams app in the Teams admin center.

Complementary tools

  • Microsoft PurviewPurview DLP can stop items with specific sensitivity labels from being used in Copilot Chat responses, and retention and audit policies apply.
  • Microsoft Copilot StudioAgents built in Copilot Studio can be used in Copilot Chat; agents with work data run pay-as-you-go.

Same family

  • Microsoft 365 CopilotLearn presents Copilot Chat (Basic) as the baseline tier beneath the paid Microsoft Copilot license.

Optional integration for

  • Microsoft TeamsCopilot Chat runs in Teams as an app managed in the Teams admin center.

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. Confirm eligibility

    Check that users hold licenses on the Copilot Chat eligibility list.

    Check: Users can open copilot.cloud.microsoft with their work account.

  2. Open the network path

    Allow the whole *.cloud.microsoft domain and the Copilot endpoints; test with the Microsoft 365 Connectivity test tool.

    Check: The connectivity test passes for copilot endpoints.

  3. Make work sign-in the default

    Tell users to sign in with Entra ID and use Tenant Restrictions v2 to control personal Microsoft accounts.

    Check: Users see the Work label and the green shield in the app.

  4. Set controls

    In Copilot controls, decide pinning, image generation, web search and who can create agents; configure Edge policies if needed.

    Check: Settings appear as intended for a test user.

Official resources

Deciding whether you need it?

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

Sources

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

  1. Overview of Microsoft Copilot Chat (opens in a new tab) Microsoft · Vendor-reported · link checked 27 Oct 2026
  2. What is Microsoft Copilot? (opens in a new tab) Microsoft · Vendor-reported · link checked 27 Oct 2026
  3. Microsoft Copilot Chat privacy and protections (Microsoft Learn) (opens in a new tab) Microsoft · Vendor-reported
  4. Manage Copilot Chat (Microsoft Learn) (opens in a new tab) Microsoft · Vendor-reported
  5. Agent Registry in Microsoft 365 admin center (Microsoft Learn) (opens in a new tab) Microsoft · Vendor-reported

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