What Agent 365 is
Agent 365 is Microsoft's control plane for AI agents. It doesn't build agents — Copilot Studio and Foundry do that. It registers agents into a tenant-wide inventory, gives each one its own Entra Agent ID (so an agent authenticates as a known, governed identity rather than a shared service account), scopes what data and systems each agent can reach, extends Purview data security and audit to agent activity, and adds Defender detections for agent-specific threats like prompt manipulation. If agents are staff, Agent 365 is the HR system, badge office and CCTV in one licence.
How the licensing works
Agent 365 is licensed per user, not per agent: US$15 per user per month standalone (checked August 2026; confirm AUD with your CSP), generally available since 1 May 2026. One user licence covers every agent that person uses, owns, sponsors or manages — no per-agent fee. Basic agent identity and inventory are free for all Microsoft Cloud customers; the paid licence unlocks the premium security, compliance and management capabilities. From 1 July 2026, agent security capabilities that previously ran on Azure metering transitioned to the Agent 365 licence model.
The prerequisite that landed on 1 June 2026
For new Agent 365 purchases from 1 June 2026, Microsoft requires an E5-class foundation licence first: Microsoft 365 E5, A5 or Business Premium, or the Microsoft Defender Suite plus Microsoft Purview Suite (including the Edu and Frontline Worker variants). Microsoft's stated reasoning is that Agent 365's core functionality leans on the identity, security and compliance stack those licences carry. Note the practical outs: Business Premium qualifies, so sub-300-seat Australian businesses have a path without E5 — and Microsoft 365 E7 customers are unaffected because E7 already includes Agent 365.
When Australian buyers should care
The moment agents move past pilot. An agent with credentials and no governance is shadow IT that never sleeps — it holds access, takes actions and leaves no owner when the person who built it leaves. If you're deploying Copilot Studio agents, custom-built agents or third-party agents into a Microsoft 365 tenant at any real scale, budget Agent 365 alongside them rather than retrofitting governance after the first incident. Until then, the free identity and inventory tier is enough to see what's already running in your tenant — start there.