Microsoft 365

Microsoft 365 Copilot vs Copilot Studio vs Azure AI Foundry: Which One to Use

Microsoft 365 Copilot vs Copilot Studio vs Foundry: who builds each, data and identity limits, licensing model, a decision flow and a start-here checklist.

Published 06 November 2026

Three Microsoft products are all described as ways to put AI to work in a business, and they are easy to confuse because they overlap. This guide compares Microsoft 365 Copilot vs Copilot Studio and Microsoft Foundry using Microsoft's own documentation, so you can pick by who builds the result, what it can see and how it is billed.

Verdict

Verdict: Use Microsoft 365 Copilot to answer questions over your own Microsoft 365 files, Copilot Studio to build a departmental agent, and Microsoft Foundry when developers are building an application.

Start with the one that needs the least building. All three inherit your permissions problems, so fix oversharing first.

Who this is for

IT managers and small IT teams in Microsoft 365 tenants who have been asked "can we use Copilot for this?" and need a defensible answer. Nothing here is a price quote or a results claim.

What each one is called today

Names moved recently. This is what Microsoft's pages say, checked on 6 November 2026.

Microsoft 365 Copilot. Microsoft's requirements page says Microsoft 365 Copilot is now named Microsoft Copilot, and Microsoft 365 Copilot Chat is now named Microsoft Copilot Chat. The licensing and billing pages still say "Microsoft 365 Copilot license", so this guide keeps the familiar name for the licensed add-on.
Microsoft Copilot Studio. Unchanged. Microsoft describes it as a graphical, low-code studio for building and managing agents and workflows.
Azure AI Foundry. Microsoft's Foundry overview lists "Azure AI Studio / Azure AI Foundry" as the previous brand and Microsoft Foundry as the current one, with Azure AI Services now Foundry Tools. Azure OpenAI appears as "Azure OpenAI in Microsoft Foundry Models", and an Azure OpenAI resource can be upgraded to a Foundry resource. Foundry roles such as Azure AI User are now Foundry User.
Microsoft Agent 365 is a separate control plane to observe, govern and secure agents. Microsoft says it became generally available for commercial customers on 1 May 2026, licensed per user.

One line each

	Microsoft 365 Copilot	Copilot Studio	Microsoft Foundry
Definition	An assistant inside Microsoft 365 apps, grounded in work data	A low-code studio for agents, workflows and agent flows	An Azure platform for building agents, models and apps
Who builds it	Nobody; admins configure it	Makers and power users, with IT governance	Developers
Who maintains it	Microsoft runs the service; IT maintains data and policy	The maker, then an owner	The development team, as software
Data and identity	Microsoft Graph content the user can already access	The agent's authentication setting and the credentials of each tool	Entra identity, Azure RBAC and the resources you connect

Data boundary and identity

Microsoft 365 Copilot. Microsoft says it surfaces only organizational data to which a user has at least view permissions, that the semantic index honors the user's access boundary, and that prompts, responses and Microsoft Graph data are not used to train foundation models. It honors Microsoft Purview usage rights on encrypted content. The flip side is that Copilot is only as private as your permissions. Microsoft says overshared or poorly governed content can affect results and increase risk.

Copilot Studio. Identity is a per-agent decision. The options are No authentication (anyone with the link can chat), Authenticate with Microsoft, or manual authentication with Microsoft Entra ID or a generic OAuth 2 provider. Each tool can run with the user's credentials or the maker's credentials, and user credentials is the default. Choosing maker credentials means users reach data through the maker's access.

Microsoft Foundry. Access is Microsoft Entra ID plus Azure RBAC, and Microsoft recommends it over keys, because a key grants full access. Each new agent gets its own Entra agent identity that starts with no permissions, so you grant what it needs.

Comparison table

	Microsoft 365 Copilot	Copilot Studio	Microsoft Foundry
Best for	Drafting, summarizing and finding things across mail, files, meetings and chats	Departmental agents and approval-style processes that connect to business systems	Customer-facing or custom AI apps, hosted agent code, voice agents
Not for	Unsupervised automation or customer-facing use	Heavy custom code or tight control over runtime	Teams without developers or an Azure subscription
Licensing model	Per-user add-on on an eligible Microsoft 365 plan; the price is not stated on the Microsoft pages checked	Copilot Credits through prepaid packs, pay-as-you-go or a prepurchase plan	Azure consumption: tokens and tools, with optional commitment tiers
Admin controls	Copilot controls, AI Administrator role, SharePoint Advanced Management, Purview	Power Platform data policies, environments, audit in Purview, agent inventory	Azure RBAC, networking, Azure Policy, content filters, Cost Management
Typical first project	A pilot group asks questions over cleaned-up SharePoint sites	An internal helpdesk or onboarding agent	A prompt agent over one knowledge source, then an app

Decision flow by scenario

Answer questions over our Microsoft 365 files. Microsoft 365 Copilot. It reads through Microsoft Graph with the user's permissions, so you do not build retrieval. If only a few people need it, a Copilot Studio agent grounded in a few SharePoint sites is the narrower option.
Automate a departmental process such as leave requests or equipment orders. Copilot Studio. Use an agent flow with a human review step so a person approves before anything changes.
Build a customer-facing or custom AI app. Microsoft Foundry for a custom app. Copilot Studio also publishes agents to websites, mobile apps and other channels when a low-code agent is enough, but check its authentication and quota limits first.
IT or infrastructure automation. Foundry, or Copilot Studio for ticket-style requests. Neither should change infrastructure unattended. See our comparison of building agents for an approval-before-change pattern.

Best usage in six steps

Write the job as one sentence and name its owner.
Decide whether the data is already in Microsoft 365. If yes, try Microsoft 365 Copilot first.
Fix permissions before the pilot: review broad SharePoint sharing and apply sensitivity labels where the data needs them.
Build only what the licensed product cannot do. Prefer Copilot Studio before Foundry unless you need code, custom hosting or network isolation.
Give every agent an owner, an authentication setting and a minimum set of tools.
Measure with your own baseline: time per task, review rejections and cost against the budget you set, not a vendor figure.

Limitations Microsoft documents

Microsoft 365 Copilot. It needs an eligible Microsoft 365 subscription, a Copilot license and a Microsoft Entra work account. Mailbox-grounded features need an Exchange Online mailbox, and Microsoft says it is not available in group mailboxes or with device-based licensing for Microsoft 365 Apps for enterprise. Microsoft Copilot Business is limited to organizations with up to 300 users. Turning off connected experiences that analyze content removes Copilot features from the desktop apps. Microsoft also says its responses are not guaranteed to be fully factual. I could not confirm a current supported-language list on a Microsoft page, so check yours.

Copilot Studio. Microsoft lists, for standard-harness agents, 500 knowledge sources per agent, a 5 MB connector payload on public cloud and, with generative orchestration, up to 25 SharePoint site URLs per agent. Documents with confidential or highly confidential sensitivity labels cannot be indexed from uploaded OneDrive or SharePoint files. Generative AI messages are rate limited: 50 requests per minute for 1 to 10 prepaid packs and 100 for pay-as-you-go. Orchestration supports up to 128 tools per agent, though Microsoft recommends 25 to 30. When usage reaches 125 percent of prepaid capacity, agents are blocked.

Microsoft Foundry. Quota is set per Azure subscription, with a Free tier and Tiers 1 to 6; Free-tier subscriptions are not eligible for quota increases. Some capabilities, including voice-based agents, memory and the agent optimizer, are marked preview, which Microsoft says is provided without a service-level agreement. Foundry does not have a single price page, because it is composed of several optional Azure services.

Mistakes that cause problems

Treating Copilot as a security boundary. It follows permissions; it does not fix them.
Publishing a Copilot Studio agent with No authentication to internal data.
Giving a tool the maker's credentials so every user inherits the maker's access.
Starting in Foundry when a licensed product would have worked, then owning the code forever.
Buying licenses before a pilot has a measurable task.
Forgetting that Copilot Credits and Azure tokens are consumption, so a busy agent can cost more than planned.

Start-here checklist

One named job, owner and success measure per project
Eligible licenses and Entra work accounts confirmed
Oversharing reviewed on the sites involved
Authentication and tool credentials chosen on purpose
Budget, alerts and a monthly credit or token limit set
Human approval on any action that changes data
Pilot group, review date and exit criteria written down

Sources

Checked 6 November 2026. No prices are quoted because none were shown with a date on the pages used.