Microsoft 365 Copilot licensing journey has already changed a few times (as has its name. Well, we all know that Microsoft loves a rebrand 😉). If you remember Copilot’s launch, organizations had to buy at least 300 licenses to use it. That limitation was quickly removed, and you can now buy individual licenses at $30 per user per month without any minimum amount.
Even better, since January 2025, any Microsoft 365 tenant has a free version of Copilot. This version is called Microsoft 365 Copilot Chat, and this blog post covers the differences between Microsoft 365 Copilot and Microsoft 365 Copilot Chat. For simplicity, I’ll refer to Microsoft 365 Copilot as “Copilot” and Microsoft 365 Copilot Chat as “Copilot Chat” going forward.
Read on to understand the possibilities offered by both options and to find answers to potential questions.
Feature comparison
The following table compares features of Copilot Chat and Copilot.
| Feature | Copilot Chat | Copilot |
|---|---|---|
| Enterprise data protection | Yes | Yes |
| Web search | Yes | Yes |
| Agents (automated AI programs that can perform multi-step actions on a user's behalf) | Yes* | Yes, no limitations. |
| Support code interpreter in agents (runs Python code to solve complex tasks) | Yes | Yes |
| Image generation | Yes | Yes |
| File upload in prompts (e.g., PDFs and Word docs) | Yes | Yes |
| Edit in pages (opens Loop for further content editing) | Yes | Yes |
| Organizational data access (e.g., SharePoint, OneDrive, Teams, Outlook, and Calendar) | No | Yes |
| Content reference in prompts (e.g., people, file, and email) | No | Yes |
| In-context Copilot (e.g., Copilot in Teams, Word, and Excel) | No | Yes |
| Copilot analytics (for insights on Copilot adoption) | No | Yes |
What’s Microsoft 365 Copilot?
Microsoft 365 Copilot is an AI assistant in Microsoft 365 that integrates with your organizational data, making it a true companion at work. Use Copilot to summarize your Outlook emails, craft new content in Word, recap your meeting notes in Teams, and more.
What’s Microsoft 365 Copilot Chat?
Microsoft 365 Copilot Chat is an AI assistant in Microsoft 365 that is grounded in web data. It doesn’t integrate with your organizational data but provides you with access to large language model, where you can perform tasks such as content generation (including images and text), summarizations, and web search using natural language queries.
When to use Microsoft 365 Copilot or Microsoft 365 Copilot Chat?
Fortunately, you don’t need to choose between both versions. Any Microsoft 365 licensed user has access to Copilot Chat. If you have a Copilot license, you have all the benefits of Copilot Chat, plus all the features of Copilot.
Where can I access Microsoft 365 Copilot or Microsoft 365 Copilot Chat?
You can access both Copilot versions by visiting https://www.microsoft365.com/chat and signing in with your Microsoft 365 account. If you have a Copilot license, you’ll have access to Microsoft 365 Copilot; otherwise, Microsoft 365 Copilot Chat.
What’s the point of buying Microsoft 365 Copilot if I can use it for free now?
While you now have a free Copilot version (Microsoft 365 Copilot Chat) in your tenant, Copilot has much more to offer. First off, it isn’t just grounded in web data; its superpower is the access to your organizational data. Copilot has access to data in Microsoft 365, but it respects your permissions while doing so, which means that you can’t access work information through Copilot that you haven’t been able to view before.
Plus, Copilot provides integrated, in-context experiences in Microsoft 365 services such as Outlook, SharePoint, and Teams. You can also use agents without requiring a consumption plan, making the experience more powerful and unlocking more possibilities.
I wrote the following article that explores how modern work might shift in the future with the use of AI agents. For more information, see From Copilot to agents to business applications: The future of modern work.
What’s the biggest advantage of Microsoft 365 Copilot Chat?
For security reasons, some organizations block access to public AI platforms such as ChatGPT and DeepSeek. Copilot Chat comes with enterprise data protection which means that your AI interactions remain safe, and Microsoft doesn’t use your prompts to further develop Copilot. For more information about enterprise data protection, see Enterprise data protection in Microsoft 365 Copilot and Microsoft 365 Copilot Chat.
Should I still use ChatGPT if I have a Microsoft 365 license?
If your organization hasn’t blocked ChatGPT, you should still consider using either Copilot or, if you don’t have a Copilot license, Copilot Chat for your work-related tasks. The risk of exposing sensitive information on a public AI platform, like ChatGPT, should be taken seriously by users.
For example, one can accidentally enter information such as names, passwords, or company secrets either via a prompt or by uploading a file. If the public AI provider uses this information to improve its model (which might depend on user settings and privacy agreements), the work-related data is shared without the organization’s control.
Conclusion
Everyday AI in the workplace becomes much easier if you have a Microsoft 365 license. You can now benefit from an AI assistant for work-related tasks without compromising on security and without the need to purchase Copilot licenses.
Copilot Chat doesn’t give you the same benefits of a Copilot license, especially the integration with your organizational data; however, I believe that security is a very important topic that makes Copilot Chat a very good starting point for organizations beginning their AI journey and that don’t want or can’t buy Copilot licenses to all users but still want to provide employees with secure AI experience.
Thanks for reading,
Jarbas
