Microsoft launches Copilot Chat with AI agents; take that, Gemini!

Microsoft is positioning Copilot as a “UI for AI”. The company has already released several variants of the GPT-4o-powered business assistant and personal users. Now, as the next step in that work, it’s releasing Microsoft 365 Copilot Chat—a rebranded version of its free AI chat experience for businesses, enhanced with agent capabilities.

Available today, the offering is designed to give businesses an easy way to explore most, if not all, capabilities of the more feature-rich Microsoft 365 Copilot, which costs $30 per user per month. While the experience is free, there is a notable caveat: agent capabilities promising task automation will only work on a consumption-based model.

The goal here is pretty obvious: Microsoft wants to give its commercial customers a taste of what it offers in the paid version of Copilot. If, with powerful features like agents, the company can make using Copilot a daily habit for Microsoft 365 users—from customer service reps to marketing leads to front-line technicians—those users may eventually turn to the paid plan.

This development comes as no surprise given that the launch of Microsoft 365 Copilot has been announced far from perfectwith some businesses describing it as expensive and complex to implement for security reasons.

For its part, Google continues to push forward with Gemini for Workspace, positioning it as affordable, accessible AI for work.

What to expect from Microsoft 365 Copilot Chat

Just like the original version, Microsoft 365 Copilot Chat will continue to have a chat interface where users will be able to enter their queries and receive responses from the AI.

The model under the hood, GPT-4o from OpenAI, will provide web-based information, allowing users to do market research or prepare strategic documents. It even supports file uploads, allowing users to search for abstracts, analysis or proposals from documents and generate images for use cases like social media marketing.

But the real deal is the AI ​​agent support. IT administrators can now use Copilot Studio to build domain-specific agents and make them available to employees through Microsoft 365 Copilot Chat.

These agents can serve as virtual teammates for employees, helping them automate repetitive tasks, from providing customer information before meetings to monitoring relevant events. These can be grounded using network data as well as operational data through Microsoft Graph or third-party graph connectors.

“A customer service representative can ask a customer relationship management (CRM) agent for account details before meeting the customer, while field service agents have access to step-by-step instructions and real-time product knowledge stored in SharePoint,” Microsoft notes in a blog post post.

By giving agents access to Microsoft 365 Copilot Chat, Microsoft wants to show businesses the value its AI offerings can bring. However, this experience won’t be completely free.

Agents will be available on a consumption-based model, with total usage determined by the number of messages used by an organization.

“You can buy messages through the Copilot Studio meter Microsoft Azurepay-as-you-go option, for $0.01/message, or through prepaid messaging packages priced at $200 for 25,000 messages/month,” the company noted in a separate post.

It’s worth noting here that different types of interactions will use messages differently, with Microsoft Graph-based responses taking up to 30 messages or 30 cents.

Taking over Gemini’s dominance

With this move, Microsoft hopes to squeeze some money out of Microsoft 365 users with basic AI needs while creating an opportunity to convert them into paying customers. It also comes as a counter to Google’s push with Twins assistant

The Sundar Pichai-led company just announced that Gemini will be available for free in its Workspace apps, including Gmail, Docs, Sheets, Meet, Chat and Vids. This integration is available to Workspace Business and Enterprise customers, meaning companies paying a base price of $14 per user per month will gain access to AI features in their core applications.

In contrast, Microsoft 365 users must subscribe to the full version of Copilot, priced at $30 per user per month, to access AI features in apps like Teams, Outlook, Word, Excel, and PowerPoint.

But Microsoft excels in offering usage-based agent AI capabilities. This allows businesses to create custom agents for task automation, a feature currently missing from Gemini.

Ultimately, the choice comes down to the ecosystem you’re aligned to and your specific needs. Google’s approach allows easy access to Gemini within core business applications, but for now it lacks agency capabilities. Meanwhile, Microsoft 365 provides web-based chat and agent features (on a pay-as-you-go model), but requires a higher investment to unlock AI functionality in its work applications.