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Microsoft 365 licences

Microsoft Copilot Chat Licence: Understanding Access and Australian Data Protection

Microsoft Copilot Chat provides a free conversational AI experience for Microsoft 365 users, with varying levels of functionality depending on your licence and data requirements.

Last reviewed 23 May 2026

What Copilot Chat Does

Copilot Chat offers a basic conversational AI experience, allowing users to ask questions and receive responses. The free tier provides access to this core functionality, enabling interaction with general web data. However, to access features like grounding responses in your organisation's internal data and integrating Copilot into Microsoft 365 applications, a Microsoft 365 Copilot licence is required. Copilot Studio provides a further option for building custom AI agents with a pay-as-you-go model.

Copilot Chat in Australian Tenants Today

For AU mid-market organisations, Copilot Chat presents a valuable entry point to explore generative AI capabilities before committing to the full Microsoft 365 Copilot enterprise SKU. The free tier allows teams to assess the technology’s potential and identify use cases. Data residency and Enterprise Data Protection (EDP) are key considerations. Ensure your M365 tenant configuration aligns with OAIC guidance under the Privacy Act 2024 and APRA CPS 234, particularly when handling sensitive data. Consider the implications for ASIC reporting if customer data is involved.

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