Under the Copilot brand, Microsoft bundles AI features for very different purposes. For companies that use Microsoft 365, two offerings are important: Microsoft Copilot Chat, an AI chat for work accounts, and Microsoft Copilot, the paid add-on license that works directly in the Office applications with company data.
As of October 26, 2026. Microsoft has renamed both offerings: Microsoft 365 Copilot became Microsoft Copilot, and Microsoft 365 Copilot Chat became Microsoft Copilot Chat. According to Microsoft, this changes nothing about security, compliance, or privacy. During a transition period, individual interfaces, licenses, and offers still carry the old names.
The offerings at a glance
- Microsoft Copilot Chat (previously Microsoft 365 Copilot Chat): an AI chat included in eligible Microsoft 365 licenses. It relies primarily on web content and on content that users provide themselves. In Outlook, it can additionally include emails, calendars, meetings, and chats, even without a Copilot license.
- Microsoft Copilot (previously Microsoft 365 Copilot): the add-on license for eligible plans, already included in Microsoft 365 E7. Via Microsoft Graph and Work IQ, it accesses emails, meetings, calendars, chats, documents, sites, and files that the person is permitted to access.
- Microsoft Copilot Business: the same Copilot features for organizations with up to 300 people and eligible Microsoft 365 Business licenses, with an annual commitment.
- Other Copilot offerings: Microsoft Security Copilot supports security teams, for example in incident response and threat hunting, and is integrated into Microsoft Defender XDR, Microsoft Sentinel, Microsoft Intune, and Microsoft Entra, among others. Microsoft Copilot Studio is used to create custom agents and workflows without much programming. GitHub Copilot is an AI assistant for software development.
In Word, Excel, PowerPoint, and OneNote, Microsoft shows which scope a person has: "Copilot Chat (Basic)" without Copilot Chat in these apps, "Microsoft 365 Copilot (Basic)" with standard access in the apps but without an add-on license, and "Microsoft 365 Copilot (Premium)" with an add-on license and priority access.
How does Microsoft Copilot work?
Microsoft Copilot combines a large language model with the data from your own Microsoft 365 tenant. When a person asks a question, Copilot uses Microsoft Graph and Work IQ to search emails, calendars, chats, and documents for relevant content and passes it to the language model as context. The principle corresponds to retrieval-augmented generation.
The key point: Copilot only uses content that the respective person is already permitted to access and does not grant any additional access. The existing permissions in SharePoint, OneDrive, and Teams therefore determine what Copilot finds and processes.
Typical examples
- Summarizing long email threads and creating draft replies in Outlook
- Capturing the key points and tasks from a meeting in Teams
- Creating a first draft based on existing documents in Word
- Analyzing data and having formulas suggested in Excel
- Generating a presentation draft from a document in PowerPoint
What companies should keep in mind
- Clean up permissions: Folders, sites, and teams that are shared too broadly suddenly become easy to find through Copilot. Reviewing sharing settings before rollout is therefore important, for example with the checklist for secure sharing in Teams and SharePoint.
- Sign in with the work account: Microsoft describes enterprise data protection for eligible work and school accounts. Employees should therefore sign in with their Microsoft Entra ID account, recognizable by the "Work" label and the green shield. Processing work data via a personal account is a typical case of shadow AI.
- Classify data: Sensitivity labels help to mark sensitive content and control its use.
- Check licenses: Microsoft regularly adjusts which features are included in which license. According to an announcement of October 14, 2026, Copilot and Copilot Business can also be purchased without an eligible base subscription from December 1, 2026; since October 16, 2026, the previous offers carry the suffix "(add-on)" in their names, for example "Microsoft 365 Copilot (add-on)". What Copilot can do still depends on the licensed Microsoft 365 apps and services.
- Start with a pilot group: Test in a small group which use cases actually save time in daily work. The checklist Introducing Microsoft Copilot contains steps and checkpoints for this.
- Clarify data protection and co-determination: Involve data protection officers and, if one exists, the works council at an early stage.
- Train: Good results depend on clear prompts and on knowing the limits of AI. As with any language model, Copilot's answers can be wrong, see AI literacy.
How it differs
Outside of Outlook, Microsoft Copilot Chat relies primarily on web content and on content that users provide themselves, such as uploaded files. In Outlook, it includes a limited section of the mailbox, calendar, meetings, and chats. Microsoft Copilot with a license additionally accesses, via Microsoft Graph and Work IQ, the content across the entire tenant for which the person is authorized. It is precisely this access that makes clean permissions the most important preparation.
Sources
- Microsoft Learn: Data, privacy, and security for Microsoft Copilot (note on the renaming)
- Microsoft Learn: What is Microsoft Copilot?
- Microsoft Learn: Overview of Microsoft Copilot Chat
- Microsoft Learn: License options for Microsoft Copilot
- Microsoft Learn: Partner Center, announcements October 2026 (Copilot offers and name updates)
- Microsoft Learn: What is Microsoft Security Copilot?
- Microsoft Learn: Overview of Microsoft Copilot Studio
- GitHub Docs: About GitHub Copilot