
In this post, we’ll explore the key differences between Microsoft 365 Copilot and Microsoft 365 Copilot Chat. At first glance, the only distinction might seem to be the word “Chat”, but that small difference represents two distinct user experiences and capabilities. So grab a drink, buckle up, and let’s dive into what sets them apart.
Setting the stage
Before we dive in, I want to set the stage. Microsoft 365 Copilot Chat isn’t the premium version, but it offers a great way for organisations to explore AI with minimal cost. As confidence and value grow, organisations may gradually scale up to Microsoft 365 Copilot, the fully integrated premium experience at $30/user/month which includes Copilot Chat and additional capabilities as shown in the image below. We’ll explore the capabilities later in this post.

In this post, I’ll also be referring to three important terms including, web-grounded, work-grounded and Microsoft Graph.
Web-grounded means Copilot only uses data from the public web data (via Bing) and does not access your work data.
Work-grounded means Copilot can access your work data, such as files, emails, meetings, and more, through the Microsoft Graph, based on what you as a user are authorised to view.
Microsoft Graph is the API (Application Programming Interface) that connects data across Microsoft 365 services, like Outlook, Teams, SharePoint, and OneDrive, allowing Copilot to securely access and reason over your work content based on your existing permissions. Copilot can only access the data which you already have permissions to access.
Microsoft 365 Copilot Chat
Microsoft made Microsoft 365 Copilot Chat available to a broader range of organisations already using Microsoft 365 services, even if they haven’t purchased the full Microsoft 365 Copilot licence. Previously, Copilot Chat was only accessible to businesses that paid for the additional Copilot licence.
As of 2025, Copilot Chat is now included at no extra cost for organisations with eligible Microsoft 365 licenses, such as Microsoft 365 E3, E5, Business Standard, Business Premium, and others. This means that if your organisation is already licensed for apps like Word, Teams, Outlook, Excel, PowerPoint, and SharePoint, you likely have access to Copilot Chat.
Copilot Chat is not free for all
It’s important to clarify a common misconception: Copilot Chat is NOT free for everyone. It’s included only for users with qualifying Microsoft 365 or Office 365 licenses. I’ll go into more detail on the specific license types later in this post.
Why this blog post?
So, why this blog post? Because while Microsoft 365 Copilot and Microsoft 365 Copilot Chat may sound similar, they serve different purposes, and understanding those differences is key to using them effectively. That’s exactly what I’ll be focusing on in this post.
Note:
This post isn’t about explaining what Microsoft 365 Copilot is or how it works behind the scenes. If you’re looking to understand the fundamentals of Microsoft 365 Copilot, you can start with my earlier blog post series, beginning with: Part 1 – Save time and be more productive at work with Microsoft 365 Copilot – Cloud Build.
January 2025: Copilot Chat Becomes More Accessible
In January 2025, Microsoft announced the broader availability of Microsoft 365 Copilot Chat, introducing it as a new offering for commercial customers. This update included support for pay as you go agents, allowing organisations to access advanced AI capabilities without committing to a full Copilot license. More on this later.
Importantly, while Microsoft 365 Copilot Chat is now included as part of a range of existing Microsoft 365 licenses, as mentioned above, it is not free for everyone. Only users with eligible Microsoft 365 commercial licenses can access it. Some advanced features, such as agents that access tenant data, will incur additional costs under a metered billing model. More on this later.
A Secure, Scalable AI Experience
Microsoft 365 Copilot Chat delivers a secure AI chat experience powered by GPT-4o, designed to be accessible across organisations without requiring a separate Copilot license. This is a major shift from the previous model as it makes it easier for businesses to explore AI capabilities without upfront investment in premium Copilot subscriptions.
The good news is that organisations can now gradually scale their adoption, starting with Microsoft 365 Copilot Chat and transitioning to the full Microsoft 365 Copilot experience as their needs evolve.
In short, Copilot Chat is included at no additional cost for users with eligible Microsoft 365 licenses. However, it’s worth repeating, this doesn’t mean it’s free for everyone. It’s only available to organisations already licensed for Microsoft 365 services.
This inclusion is a great opportunity for businesses that want to explore Copilot’s capabilities but aren’t yet ready to commit to the full premium version. It allows organisations to experiment, evaluate, and build confidence before scaling up to the premium version, known as Microsoft 365 Copilot.
Who has access to Microsoft 365 Copilot Chat?
Copilot Chat is available at no additional cost for Microsoft Entra account users with one of the following eligible licenses. The screen shot below was taken from the Microsoft website and lists which 365 licenses include Microsoft 365 Copilot Chat as of January 2025.

Source: Microsoft 365 Copilot Chat eligibility
What can Microsoft 365 Copilot Chat be used for?
Microsoft 365 Copilot Chat empowers organisations to adopt AI in the workplace without the upfront cost of licenses. It provides a secure, web-grounded AI chat experience powered by GPT-4o, enabling users to access real-time information from the internet and interact with organisational data, with the confidence that enterprise-grade security, privacy, and compliance are built in by design.
You can use Microsoft Copilot Chat to:
Upload Files
Users can upload files directly into the chat and ask Copilot to assist with content, analysis, or formatting, making it a powerful productivity tool. You can upload your organisation files, such as a word document and ask Copilot to do things like summarise key points, analyse data in an Excel spreadsheet, and suggest improvements to a PowerPoint presentation.
Copilot Pages
Copilot Pages is a collaborative workspace where you can co-create content with both AI and your colleagues in real time. You can bring together content from Copilot, your files, and even the web, all in one place. For example, you might ask Copilot to draft a plan for a team event. That content can be added directly to a Copilot Page with the click of your mouse, where your team can edit, refine, and build on it together in real time. No more emailing documents back and forth or managing multiple versions. Everyone works from the same page.

Note: Copilot Pages is available in both Microsoft 365 Copilot and Copilot Chat at no additional cost but requires a SharePoint license, as it powers the underlying collaboration and storage features.
Security
Microsoft 365 Copilot Chat includes robust enterprise grade security, privacy, and compliance controls. It’s built on Microsoft’s trusted cloud infrastructure and adheres to the same security and compliance commitments as the rest of the Microsoft 365 suite.
Agents
Agents are integrated into the chat experience, but not all agents are available for free. Microsoft 365 Copilot Chat has agents that can be used at no additional cost, and agents that are billed based on metered consumption. Agents that are grounded in instructions and public websites are available at no additional cost. If you wish to configure an agent which is grounded in your enterprise data or third party, this is a paid for service based on you setting up an agent as part of a message pack or pay as you go basis. For example, you may wish to create an agent which links to your CRM system which can then be utlised to retrieve information without you having to login to your CRM system. AI agents were previously available in the full Microsoft 365 Copilot experience only, requiring a $30 per user per month license.
I have created a comparison of agent availability in the table below.
Agent Type | Available in Copilot Chat | Available in Microsoft 365 Copilot ($30 license) |
Declarative Agents Grounded in public data or instructions | ✅ Included (Grounded in web data) | ✅ Included (Grounded in web data) |
Metered Agents Agents that access enterprise data like SharePoint or CRM | ✅ Available 💵 Paid (Metered) | ✅ Available 💵 Included in license |
Autonomous Agents AI Agents that perform multi step tasks automatically without user prompts. | ✅ Available 💵 Paid (Metered) | ✅ Available 💵 Paid (Metered) |
Managing Costs with Metered Agents
A common concern with AI adoption and Microsoft 365 Copilot Chat is: how do we prevent pay-as-you-go costs from spiraling out of control? If you’re wanting to try out agents with Microsoft 365 Copilot Chat but nervous about the costs, Microsoft offers two billing options to help organisations manage usage and stay within budget:
- Pay-as-you-go: An open billing model where you’re charged $0.01 per message.
- Message/Consumption Packs: A fixed monthly plan offering 25,000 messages for $200 per tenant.
These options are configured through the Copilot Studio portal, where IT admins can monitor usage and set limits. Let’s explore further.
IT Controls and Agent Access
To maintain control and security:
- Declarative agents (grounded in public data or instructions) are enabled by default and can be used/created for free by your users in Copilot Chat. There are also a number of built in agents grounded in the web which can be utilised out of the box.
- Metered agents (e.g., those accessing SharePoint or Graph Connector content) are disabled by default and must be explicitly enabled by IT admins via Copilot Studio.
- In Microsoft 365 Copilot ($30 per user license), agent capabilities are enabled by default and included as part of the package (apart from autonomous agents), but admins can still control which agents are available to users.
More info on pricing can be located at the following link, Copilot Studio licensing.
Admins can:
- Enable or disable metered billing for specific users or groups
- Decide who can create agents
- Restrict access to pre-approved agents in the gallery
Reporting:
- The Microsoft 365 Copilot Chat usage dashboard provides insights into active usage of Microsoft 365 Copilot Chat. The report includes total active users, average daily active users, and active users per app. Usage insights can be viewed as totals and trends for the past 7, 30, 90, or 180-day periods. The report also shows the last activity date per user, anonymised by default. To view all reports, check out Microsoft 365 Reports in the admin center overview.
Note
At the time of writing, the report is currently limited to users without a Microsoft 365 Copilot license that interact with Copilot Chat in Teams, Outlook, Copilot.cloud.microsoft, Microsoft 365 Copilot (app), and Microsoft Edge.
Source: Microsoft 365 Copilot Chat usage
How do I access Microsoft 365 Copilot Chat and Microsoft 365 Copilot?
In the table below, I have included some details about the personal free version in column three, as this version causes confusion. The personal version is available to all. I have provided some information on the personal version towards the end of this post but the main focus is the two business versions of Copilot in columns one and two.
Microsoft 365 Copilot Chat | Microsoft 365 Copilot | Microsoft Copilot (Personal) | |
Access | m365copilot.com copilot.cloud.microsoft.com or Microsoft 365 Copilot App via mobile or desktop or Outlook Click the Copilot icon from the left pane in Outlook desktop or Outlook Web app. or Microsoft Teams Click the Copilot icon from the left pane inside the Microsoft Teams desktop or web app. | m365copilot.com copilot.cloud.microsoft.com or Microsoft 365 Copilot App via mobile or desktop or Outlook Click the Copilot icon from the left pane in Outlook desktop or Outlook Web app. or Microsoft Teams Click the Copilot icon from the left pane inside the Microsoft Teams desktop or web app. | copilot.microsoft.com bing.com/chat or Copilot app via mobile or desktop |
For organisations | ✅ Eligible for customers with existing Microsoft 365 licenses | ✅ Eligible for customers with existing Microsoft 365 licenses Additional Copilot licenses required at $30 per user, per month, if accessing the premium features. | ❌ Free and accessible to all using a personal email account, such as @hotmail, @live and so on. Not recommended for sensitive business data. |
Comparison between Microsoft 365 Copilot Chat and Microsoft 365 Copilot
The below table provides a deeper comparison between Microsoft 365 Copilot Chat and Microsoft 365 Copilot.
Microsoft 365 Copilot Chat | Microsoft 365 Copilot (Licensed version) | |
Requires a work or school account | ✅ | ✅ |
Responses are web-grounded (Powered by GPT-4o) | ✅ | ✅ |
Responses are work-grounded | ❌ | ✅ |
Includes Copilot Pages | ✅ | ✅ |
Upload files to prompts | ✅ limited | ✅ |
Create images and data visualisations | ✅ limited | ✅ |
*Code Interpreter | ✅ limited | ✅ |
Copilot integrated in 365 Apps, such as Word, Excel, Outlook, Teams, PowerPoint… | ❌ | ✅ |
IT Management Controls including who can access/create agents. | ✅ | ✅ |
Usage reports | ✅limited | ✅ |
**SharePoint Advanced Management (More info below) | ❌ | ✅ |
***Discover and pin agents for users. More info below. | ✅ | ✅ |
Use agents grounded in web data | ✅ | ✅ |
Use agents grounded in work data | 💵 Paid (Metered) | ✅ |
Autonomous agents | 💵 Paid (Metered) | 💵 Paid (Metered) |
****Copilot actions (More info below) | ❌ | In preview |
*****Pre-built M365 agents (Interpreter, Facilitator, Project Manager, Employee self-service) | ❌ | In preview |
*Code Interpreter in Microsoft 365 Copilot uses the Python programming language to help users perform advanced data analysis, including coding, visualization, and mathematical calculations.
**SharePoint Advanced Management (SAM)
SharePoint Advanced Management is a Microsoft 365 add-on that helps organisations prepare for Copilot by improving content governance, reducing oversharing, managing content sprawl, and ensuring Copilot accesses only accurate, well-managed data. Beginning in early 2025, it is included with the paid Microsoft 365 Copilot license. More info at: SharePoint Advanced Management (SAM)
***Microsoft 365 Copilot Chat pinned
To ensure people across your organisation have easy access to Copilot Chat and can benefit from its security and experience updates, Microsoft recommend that your users have Microsoft 365 Copilot Chat pinned to their navigation bar. Starting on May 1, 2025, and rolling out over time, Microsoft 365 Copilot Chat is pinned by default in the navigation bar of the Microsoft 365 Copilot app, Teams, and Outlook for most users who are eligible for Copilot Chat across the web, mobile, and desktop. Source: Manage Microsoft 365 Copilot Chat.
****Copilot actions:
The new Copilot Actions feature, introduces intelligent agents that can perform tasks across apps and systems on your behalf. These agents, part of the broader Microsoft 365 Copilot update, can now interact with websites and desktop applications, clicking buttons, navigating menus, and entering data, just like a human would.
*****Pre-built M365 agents (Interpreter, Facilitator, Project Manager, Employee self-service):
These are specialised AI assistants designed to handle specific roles and tasks within organizations. Interpreter helps translate and explain complex data or documents. Facilitator supports meeting coordination, follow-ups, and collaboration. Project Manager assists with tracking tasks, deadlines, and project updates. Employee Self-Service enables staff to get quick answers or complete HR/IT tasks like onboarding or support requests.
Demo: Differences in Microsoft 365 Copilot Chat and Microsoft 365 Copilot interfaces
In this section, I walk through a demo of both Microsoft 365 Copilot Chat and Microsoft 365 Copilot.
- You can access Microsoft 365 Copilot Chat by signing in with your Microsoft Entra ID account at either:
https://copilot.cloud.microsoft
https://m365copilot.com
If you sign in with a user who has been assigned a Microsoft 365 license, but does not have a Copilot license, you’ll be redirected to a web interface similar to the one below.

Notice the green shield icon in the image above? Your organisational data is protected. You can upload company files and interact with Copilot, knowing that enterprise-grade security and compliance controls are in place.
Work and Web tabs are missing
In the image below, you’ll also notice that the “Work” and “Web” tabs are missing. These are only available in the licensed Copilot experience.
The Web tab allows Copilot to access public internet data via Bing, enabling real-time, web-grounded responses.
The Work tab enables Copilot to access organisational data through Microsoft Graph, such as files, emails, and meetings, based on the user’s existing permissions.
Even without these tabs, both Microsoft 365 Copilot Chat and Microsoft 365 Copilot support file uploads. Users can manually upload documents and ask Copilot to summarise, analyse, or even generate content based on the file.

Another screenshot of the Microsoft 365 Copilot Chat interface below:

The premium version, which costs $30 per user per month, grants you access to both Copilot Chat and a suite of additional premium features, as shown in the image below and as I detailed in the comparison table earlier.

- If you sign in with an account that has a Copilot license assigned, the paid version at $30 per user, per month, you’ll see a slightly different interface. Notably, the “Work” and “Web” tabs are visible, offering access to organisational data and public web content respectively.
Furthermore, Microsoft 365 Copilot (licensed at $30 per user, per month) allows employees to interact with their work data directly through Copilot. For example, you could ask Copilot to:
- Find an email from a colleague in your mailbox
- Check when you last had a meeting with a colleague
- Summarise outstanding tasks assigned by your manager
- Check your Microsoft Teams messages and highlight any unresolved actions
- and more
These capabilities are possible because the premium version is work-grounded, meaning it can access organisational data via Microsoft Graph.
Note: Microsoft Graph is the API that connects data across Microsoft 365 services, like Outlook, Teams, SharePoint, and OneDrive, allowing Copilot to securely access and reason over your work content based on your existing permissions. Copilot can only access the data which you already have permissions to access.
The work and web tabs are available for licensed users as shown in the image below.

Access Copilot Chat from Teams and Outlook
Copilot Chat is also accessible from the Microsoft Teams and Outlooks apps. Launch Microsoft Teams desktop or the web app and click the Copilot icon which appears in the left pane.

To access Copilot Chat via Microsoft Outlook, launch Outlook desktop or via the web and click the Copilot icon which appears in the left pane.

Microsoft 365 Copilot is integrated into 365 Apps
Both versions of Copilot allow you to upload documents into the chat experience. However, the licensed version, known as Microsoft 365 Copilot, is fully integrated into Microsoft 365 apps such as Word, Excel, PowerPoint, Outlook, Teams, and more.
A Copilot icon appears within these apps, enabling you to work with Copilot directly inside the Microsoft 365 environment. For example:
- In Outlook, you can ask Copilot to draft a new email or reply to an existing one.
- In Excel, you can ask Copilot to analyse data, add columns or rows, apply conditional formatting, insert filters, and perform deep analysis.
- In PowerPoint, you can ask Copilot to create a new slide deck—referencing a Word document, such as a company income statement.
- In Teams, you can ask Copilot to summarise a long conversation or analyse a recorded meeting you missed.
- and more
This integrated experience is exclusive to users with a Microsoft 365 Copilot license, priced at $30 per user, per month. If you don’t have a Copilot license, these in-app Copilot icons will not be visible.
Copilot in Excel
Users assigned a Copilot license will find the Copilot icon integrated in their 365 applications. Example of Microsoft Excel below.

Which AI Solution is right for you?
If your organisation already uses one of the eligible Microsoft 365 licences listed earlier, but hasn’t purchased any Copilot licenses, Microsoft 365 Copilot Chat is already included at no additional cost. This means your employees can start using it right away.
Because Copilot Chat includes built-in enterprise-grade data protection, it helps reduce the risk of employees turning to third-party AI tools that may not offer the same level of security. You don’t want staff copying and pasting sensitive company data into external AI platforms without knowing how that data is handled.
With Microsoft 365 Copilot Chat and Microsoft 365 Copilot, your data is protected under Microsoft’s Enterprise Data Protection (EDP) commitments. Your prompts, responses, and uploaded files are not used to train the underlying large language models (LLMs).
For comparison, here’s OpenAI’s article on how your data may be used when using their services such as ChatGPT.

Source: How your data is used to improve model performance | OpenAI Help Center
and the below is from the Microsoft website

Source: Enterprise data protection in Microsoft 365 Copilot and Microsoft 365 Copilot Chat | Microsoft Learn
Another benefit of Microsoft 365 Copilot Chat, especially for organisations that haven’t purchased Copilot licenses, is the ability to work with AI agents. If the agent is web-grounded, it can be used at no additional cost. For more advanced scenarios, such as agents grounded in enterprise data, you can choose between a pay-as-you-go model or a fixed monthly message pack which can be controlled by IT. This allows businesses to trial agents and evaluate whether they can support employee productivity and long-term growth, without committing to the full premium Copilot experience immediately. You may wish to upgrade to the premium version at a later date.
What’s Microsoft Copilot without the 365 branding?
I briefly mentioned Microsoft Copilot in a comparison table above. You may have noticed references to Microsoft Copilot, without the “365” branding, and wondered how it differs from Microsoft 365 Copilot and Microsoft 365 Copilot chat.
Microsoft Copilot is the free, personal version of Copilot available to anyone with a personal Microsoft account (e.g. @hotmail.com, @outlook.com, @live.com). You can access it by visiting https://copilot.microsoft.com, clicking Sign in, and logging in with your personal email address. You can also use the personal version without logging in, but won’t be able to use the image generation and voice features without logging in first. Yes, Copilot talks to you. Give it a try.
Microsoft Copilot is a consumer version and is available for free. It can help you with personal tasks and uses information from the internet. You can use it for non sensitive work tasks, but be cautious. Never add sensitive or proprietary work information in a prompt.
Check out my blog post on the free version of Copilot: Part 4 – Free Version of Microsoft Copilot – Cloud Build.
Note: If you have purchased Microsoft 365 apps for personal or family use, there’s also the option to purchase Copilot Pro, which integrates Copilot into your 365 applications at home. While the focus of this post is on Microsoft 365 Copilot Chat and Microsoft 365 Copilot for business use, it’s worth knowing that personal Copilot options are available too. A comparison of the free and pro versions is available at the following link, Compare Copilot Free and Pro.
Summary
Microsoft 365 Copilot Chat and Microsoft 365 Copilot are the two main ways your organisation can access Copilot capabilities.
Microsoft 365 Copilot Chat
- Included at no additional cost for users with eligible Microsoft 365 licenses. It’s not free for all.
- Web-grounded by default: it uses the latest AI models and public web data to answer questions, generate content, and provide insights.
- Does not access your work data, unless you upload files manually.
- Enterprise-grade data protection: your data is not used to train AI models.
- Agents grounded in the web can be created/used for free
- If you wish to create an agent to interact with a third party app, SharePoint and so on, this is chargeable.
- Ideal for organisations looking to explore AI securely without purchasing Copilot licenses straight away.
Microsoft 365 Copilot
- Includes everything in Copilot Chat, plus more.
- Grounded in both web and work data, can access your emails, meetings, documents, chats, and more via Microsoft Graph.
- Integrated into Microsoft 365 apps like Word, Excel, PowerPoint, Outlook, and Teams.
- Agents included apart from autonomous agents
- Requires a paid license ($30 per user/month), assigned by your Microsoft 365 admin.
- SharePoint Advanced Management (SAM) included
I hope you found this post of use. All feedback is welcome, so please feel free to submit a comment below. Thank you