Which Microsoft Copilot Plan Does My Company Need?

Microsoft uses the word "Copilot" for at least six different products. Before you can choose the right plan, you need to know which Copilot you're actually buying.

This guide covers Microsoft Copilot and Microsoft 365 Copilot — the AI assistants integrated into Microsoft's consumer and business productivity products. It does not cover GitHub Copilot, Security Copilot, Copilot Studio, Copilot for Sales/Service, or Dynamics 365 Copilot, which are separate products with separate terms.

What this means in practice

Personal Microsoft accounts → consumer terms. Anyone using Copilot through copilot.microsoft.com with a personal Microsoft account, or through a Microsoft 365 Personal, Family or Premium subscription, is on consumer terms. Conversations may be used for AI training unless the user actively opts out (Copilot Settings → Privacy → "Model training on text"). There is no DPA. This is fine for personal productivity but not legally suitable for processing customer or employee data on behalf of your company.

Entra (work or school) accounts → commercial terms. The moment a user signs in with a Microsoft Entra organisational account, they get Enterprise Data Protection automatically. Prompts and responses are not used to train foundation models, the Microsoft DPA covers the processing, and EU Data Boundary commitments apply. This is true even for the free Copilot Chat experience available to organisations with qualifying Microsoft 365 licences.

The decision for businesses comes down to capability, not compliance. All work-account Copilot tiers are compliance-equivalent. The differences are about features:

• Copilot Chat (free with most M365 plans) — chat-only, no integration into Word/Excel/Outlook, no access to your organisation's data via Microsoft Graph
• Microsoft 365 Copilot — embedded in Office apps, can summarise your documents, draft emails using your data, query your organisation's content via Microsoft Graph

Quick guidance by company size

• Small companies (1–20 employees): If you already have Microsoft 365 Business Basic/Standard/Premium, your staff get Copilot Chat free with Enterprise Data Protection. For Copilot inside Word, Excel and Outlook, add Microsoft 365 Copilot Business at $18–21/user/month.
• Medium-sized companies (20–300 employees): Microsoft 365 Copilot Business is the entry-level paid tier and covers most needs. Above 300 users you need the Enterprise version.
• Large companies and regulated sectors: Microsoft 365 Copilot (Enterprise edition) at $30/user/month, optionally bundled with Microsoft 365 E5 in the new E7 frontier suite ($99/user/month, launching May 2026). Enterprise editions include the full EU Data Boundary, in-country data processing in some regions, and integration with Microsoft Purview for governance.
• Educational institutions: Microsoft 365 A1/A3/A5 licences include Copilot Chat with Enterprise Data Protection for students, faculty and staff at no extra charge.

Footnotes

1. Training. Consumer Copilot (Free, Personal, Family, Premium) uses conversation activity for AI training by default. Users can opt out in Copilot Settings → Privacy → "Model training on text". On Entra (work or school) accounts — including the free Copilot Chat tier — prompts, responses and data accessed through Microsoft Graph are contractually never used to train foundation models. This is a Data Protection Addendum commitment, not a setting.
2. Data protection contract. Under EU and Icelandic data protection law, any company that lets a third party handle personal data on its behalf must have a written data protection contract with that third party (a Data Processing Addendum, or DPA). Microsoft's DPA covers all Microsoft 365 commercial services, which includes any Copilot experience accessed via an Entra organisational account. It does not cover personal Microsoft accounts.
3. Safe for customer or employee data. Without the data protection contract, your company cannot show regulators or auditors that it has the required paperwork in place. This matters regardless of whether training is switched off — the legal question is about having the contract.
4. EU Data Boundary. Microsoft's commitment to keep EU customer data inside the EEA at rest and in transit. Available across Microsoft 365 commercial services, including work-account Copilot. Note the caveats above about Anthropic models and Flex Routing.
5. M365 Personal / Family / Premium. Consumer Microsoft 365 subscriptions. AI features in these plans use a monthly "AI credits" allowance and operate under consumer terms even though the subscription is a paid product. M365 Premium (US$199/year) bundles the former Copilot Pro into the Family subscription.
6. M365 Copilot Chat. The free chat experience available at copilot.cloud.microsoft to anyone signed in with an Entra account that has a qualifying licence (Microsoft 365 Business Basic/Standard/Premium, or A1/A3/A5 for education). Includes Enterprise Data Protection automatically. Does not include integration into Word/Excel/Outlook — that requires the paid Copilot add-on.
7. M365 Copilot Business. $18/user/month annually (promotional through 30 June 2026, then $21), capped at 300 users. Adds Copilot inside Word, Excel, PowerPoint, Outlook and Teams; integrates with Microsoft Graph to access your organisation's documents and email when answering prompts.
8. M365 Copilot (Enterprise). $30/user/month annually, no user cap. Adds advanced governance, Microsoft Purview integration, configurable retention, and full EU Data Boundary support. The new Microsoft 365 E7 Frontier Suite ($99/user/month, launching 1 May 2026) bundles this with M365 E5 and Agent 365.