Microsoft is rolling out its AI assistant, Copilot Chat, for free inside its core Office apps – giving 365 business subscribers access to productivity-enhancing tools without the $30-per-user Copilot license.

Starting this week, Word, Excel, PowerPoint, Outlook, and OneNote will all feature a new Copilot Chat sidebar.

The assistant can rewrite documents, summarise reports, generate ideas, and provide tailored suggestions based on the file a user is working on. In Excel, it can help analyse data trends, while in PowerPoint it can draft slide decks in seconds. In Outlook, it promises to cut through inbox clutter by summarising long email threads or drafting polished responses.

The moment you need it, you can pull up Copilot Chat in a side pane of your file, and it will be ready to help right where you’re working – which means less copy and pasting, file uploading, and switching apps,” said Seth Patton, General Manager of Microsoft 365 Copilot product marketing.

Possibilities – and Limitations

The free version comes with limitations however. It is confined to the single document or file a user has open, making it useful for immediate assistance but less powerful for cross-file or organisational-wide reasoning.

For that, Microsoft is still pushing its premium Microsoft 365 Copilot license, which costs $30 per user, per month.

That tier provides deeper integration with an organisation’s work data, priority access to advanced features, and better performance thanks to GPT-5.

Licensed Copilot users also gain access to premium capabilities such as file uploads, image generation, and faster response times, even during peak usage.

“Users with a Microsoft 365 Copilot license get priority access to features like file upload and image generation, along with the latest technology like GPT-5,” Patton explained, underscoring that the paid tier remains the best option for businesses relying heavily on AI.

Microsoft has been steadily expanding Copilot across its ecosystem. Earlier this year, the company bundled Copilot features into consumer Microsoft 365 plans, but the move came with a price increase for subscribers. This time around, Microsoft is not raising prices for business users.

Instead, it is sweetening the deal by offering Copilot Chat for free while keeping the more powerful enterprise features behind its premium license.

The company is also preparing to consolidate its AI offerings. In October, Microsoft plans to merge its sales, service, and finance Copilots into the existing Microsoft 365 Copilot subscription. For organisations already paying for multiple AI tools across departments, this bundling could lower costs and simplify adoption.

What This Means For IT Leaders

The move signals Microsoft’s broader strategy: make AI assistants ubiquitous in Office apps, while creating a clear upgrade path for businesses that want the most advanced features. By embedding Copilot Chat directly into the workflow of millions of employees, Microsoft is ensuring its AI tools become a default part of daily productivity – whether companies pay for the premium license or not.

For many businesses, the free Copilot Chat could serve as a gateway into AI-powered productivity. It gives organisations a risk-free way to experiment with generative AI inside familiar tools like Word and Excel, without committing to extra costs.

At the same time, it’s a clever play by Microsoft to showcase the benefits of the full Copilot license, nudging companies toward upgrading once they experience the productivity gains firsthand.

With competitors like Google also integrating AI assistants into Workspace apps, Microsoft’s decision to offer a free baseline version of Copilot could help it maintain an edge in the increasingly competitive AI productivity market.

For now, Microsoft 365 business subscribers can expect to see the new Copilot Chat sidebar appear in their apps, opening up a new era where drafting, analysing, and organising work becomes a conversational process – at no extra charge.