Microsoft launches AI-powered Copilot Chat with new agents

Microsoft has introduced Microsoft 365 Copilot Chat, a rebranded AI chat experience offering agentic capabilities for businesses, with a consumption-based pricing model for advanced features.

The core offering: Microsoft’s latest AI chat platform builds upon its existing Copilot technology by incorporating new agent-based automation capabilities while maintaining core features like web-based information retrieval and document analysis.

• The platform continues to utilize OpenAI’s GPT-4o model for processing user queries and generating responses
• Users can upload files for summaries and analysis, as well as generate images for marketing purposes
• The basic chat functionality remains free for business users, providing access to web-grounded information

Key feature – AI agents: The platform’s distinguishing element is its support for customizable AI agents, which can automate routine tasks and access organization-specific information.

• IT administrators can create domain-specific agents using Copilot Studio
• Agents can access data from both web sources and internal systems via Microsoft Graph or third-party connectors
• Custom agents can perform tasks like providing customer information and monitoring relevant events

Pricing structure: Microsoft has implemented a hybrid pricing model that combines free basic features with usage-based charging for advanced capabilities.

• Agent interactions are billed at $0.01 per message
• Pre-paid packages are available at $200 for 25,000 messages per month
• Microsoft Graph-based responses can consume up to 30 messages, costing $0.30 per interaction

Competitive positioning: The launch represents Microsoft’s strategic response to Google’s Gemini integration within Workspace applications.

• Google offers Gemini features free within Workspace apps for customers paying $14 per user monthly
• Microsoft’s full-featured Copilot integration within Office apps requires a $30 per user monthly subscription
• Microsoft’s agent capabilities differentiate it from Google’s current offering, which lacks similar automation features

Market implications: This rollout addresses previous challenges with Microsoft 365 Copilot adoption while creating new opportunities for user conversion.

• The free tier serves as an entry point for businesses hesitant about the full $30 per user subscription
• The consumption-based model allows organizations to test advanced features without full commitment
• The platform could appeal to businesses seeking customizable automation solutions while remaining cost-conscious

Looking ahead: While Microsoft’s approach offers unique advantages in automation and customization, the success of this tiered strategy will likely depend on businesses’ willingness to navigate the consumption-based pricing model and their specific needs for AI-powered workplace tools.