If you have more than 2,000 Microsoft 365 users in your business, there’s a licensing change arriving on 15 April 2026 that’s worth getting across now rather than discovering on the day.
Microsoft has confirmed that Copilot Chat inside Word, Excel, PowerPoint and OneNote will no longer be available to unlicensed users on larger tenants. From that date, full in-app Copilot access requires a paid Microsoft 365 Copilot licence.
For businesses that have been quietly relying on the included Copilot Chat experience, this will be a noticeable shift, particularly for teams in finance, HR, bids and operations where in-app Copilot has become part of how work gets done.
Our team picked this one up early and it’s been a regular topic in our client conversations since. If it hasn’t crossed your desk yet, this post should help.
I’ll walk you through what’s changing, why Microsoft is making this move, who it affects most, and what to do before the deadline.
What Is Copilot Chat, and What’s Actually Changing?
The Difference Between Basic and Premium
Up until now, Microsoft has included a version of Copilot Chat inside the core Microsoft 365 apps for all users, whether or not they held a paid Copilot licence. This free version let staff ask Copilot questions, get help drafting content, and get quick answers from within Word, Excel, PowerPoint and OneNote.
From 15 April 2026, Microsoft is splitting this experience into two tiers for larger tenants.
Copilot Chat (Basic): Available in the Microsoft 365 Copilot app and in Outlook. No in-app access to Copilot inside Word, Excel, PowerPoint or OneNote.
M365 Copilot (Premium): Full in-app Copilot experience across all Microsoft 365 apps, with advanced reasoning, richer model access and deeper integration with your business data.
The key point here is the 2,000-user threshold. If your tenant has fewer than 2,000 Microsoft 365 users, this change doesn’t apply to you yet. If you’re over that number, any user without a paid Microsoft 365 Copilot licence will lose access to Copilot inside the Office apps on 15 April.
Why Is Microsoft Drawing This Line?
Microsoft hasn’t published an exhaustive explanation, but the picture is fairly clear from the way the change is structured. Enterprise-grade AI with advanced reasoning, multiple model support and deep Microsoft 365 integration requires real infrastructure and commercial commitment.
Keeping that available for free across large tenants isn’t sustainable, especially as Microsoft has been building in multi-model capabilities, with both GPT and Anthropic’s Claude now available inside Microsoft 365 Copilot, as covered in our recent post on Claude AI now available in Microsoft 365 Copilot.
The smaller tenant exemption reflects a different calculus. For businesses under 2,000 users, Microsoft appears to be keeping the free tier available, at least for now, as part of a broader effort to grow adoption across the mid-market.
Who This Affects Most
The Teams That Will Feel It First
Not everyone in your business uses Copilot inside Word or Excel every day. But there are teams where in-app Copilot has quietly become part of how work gets done, and those are the ones that’ll notice the change most on 15 April.
From what I’ve seen working with Australian businesses, the functions that tend to rely most on in-app Copilot include:
Finance teams using Copilot in Excel to summarise data, write formulas and draft commentary for reports
Proposals and bids teams using Copilot in Word to speed up drafting and editing
HR and people teams using Copilot in Word and PowerPoint to create policies, presentations and communications
Executive assistants and operations staff who use Copilot across Outlook, Word and Teams as a general productivity tool
If you haven’t mapped where Copilot is being used inside your business, now’s the time to do it. The Microsoft 365 admin centre and usage analytics can help you identify the users and groups who’ll be most affected.
The Cost Question
I know the immediate question for a lot of finance and IT leaders is going to be: “What does it cost to licence everyone who needs Premium access?”
Microsoft 365 Copilot pricing in Australia is currently around AU$49.39 per user per month on an annual commitment, and AU$51.87 on monthly billing. For a 2,500-seat business where even 10% of users rely on in-app Copilot daily, that’s a licensing decision worth getting right, not rushing.
The good news is that not everyone needs Premium access. You don’t need to licence every user in your tenant, just the ones who’ll genuinely use in-app Copilot in their day-to-day work. Getting that mapping right is the first step to a sensible budget conversation.
Pull a usage report from the Microsoft 365 admin centre. Look at Copilot activity across Word, Excel, PowerPoint and OneNote and identify which users are actively using in-app Copilot at least a few times per week. These are the users most at risk of a disrupted experience after the change.
If you’ve already started a broader Copilot deployment, our Microsoft 365 Copilot Readiness Assessment can give you a structured view of where adoption is strong and where the gaps are.
Step Two: Build a Licensing Plan That Matches Your Use Cases
Once you know who needs Premium access, you can size your licensing properly. Think about it in three groups:
Power users who rely on Copilot in the Office apps daily. These people should have Microsoft 365 Copilot licences before 15 April.
Occasional users who use Copilot for a specific task, like quarterly reporting or a tender process. Consider whether pay-as-you-go consumption or a targeted licence makes more sense.
Infrequent users who’ve interacted with Copilot once or twice out of curiosity. These users can move to Basic Chat without much disruption.
Copilot licensing has become more flexible in recent months, with month-to-month CSP billing options now available and extended promotional pricing for businesses with under 300 licences. Understanding which tier fits which user group can make a meaningful difference to both cost and adoption outcomes.
Step Three: Plan the Communication to Your People
This is the one I see businesses skip, and it always causes problems. If users don’t hear from IT or their manager before 15 April, they’ll open Word on the 16th, find that Copilot behaves differently, and start logging support tickets or assuming something is broken.
A short communication explaining what’s changing, why it’s changing and what to do if they need Premium access goes a long way. Keep it plain and practical. It doesn’t need to be a long document.
Step Four: Check Your Data and Security Settings
If you’re using this moment to expand your paid Copilot licences to more users, it’s also a good time to check that your Microsoft 365 environment is ready to support broader in-app AI use. That means reviewing SharePoint and OneDrive permissions so Copilot isn’t surfacing content it shouldn’t, checking sensitivity labels are applied to your most sensitive files, and confirming your conditional access policies are in good shape.
We’ve written about the security side of this in detail in Copilot Security Myths vs Reality and if your broader Copilot governance is something you’re still building out, our post on how to secure AI agents in Microsoft 365 covers the Entra Agent ID and Purview controls that are now available to help you do that properly.
Don’t Let This Change Become a Disruption
I’ll be honest: I’m glad Microsoft is making the distinction between Basic and Premium clearer.
It creates a better conversation about where AI is genuinely adding value inside a business versus where people are using it occasionally and getting modest benefit. That conversation is worth having.
What I don’t want to see is Australian businesses discovering this change at the worst possible moment, whether that’s during a busy end-of-quarter period, a tender process or a board reporting cycle.
The businesses that manage this well will spend a few hours now mapping usage, talking to their licensing partner and putting a short communication plan in place. The ones that don’t will spend more time and money cleaning up the mess in April.
If you’d like help thinking through your licensing position, planning the communication to your people, or checking whether your Microsoft 365 environment is ready for a broader Copilot rollout, we’d love to talk.
About the Author
Carlos Garcia is the Founder and Managing Director of CG TECH, where he leads enterprise digital transformation projects across Australia.
With deep experience in business process automation, Microsoft 365, and AI-powered workplace solutions, Carlos has helped businesses in government, healthcare, and enterprise sectors streamline workflows and improve efficiency.
He holds Microsoft certifications in Power Platform and Azure and regularly shares practical guidance on Copilot readiness, data strategy, and AI adoption.
If you have more than 2,000 Microsoft 365 users in your business, there’s a licensing change arriving on 15 April 2026 that’s worth getting across now rather than discovering on the day.
Microsoft has confirmed that Copilot Chat inside Word, Excel, PowerPoint and OneNote will no longer be available to unlicensed users on larger tenants. From that date, full in-app Copilot access requires a paid Microsoft 365 Copilot licence.
For businesses that have been quietly relying on the included Copilot Chat experience, this will be a noticeable shift, particularly for teams in finance, HR, bids and operations where in-app Copilot has become part of how work gets done.
Our team picked this one up early and it’s been a regular topic in our client conversations since. If it hasn’t crossed your desk yet, this post should help.
I’ll walk you through what’s changing, why Microsoft is making this move, who it affects most, and what to do before the deadline.
What Is Copilot Chat, and What’s Actually Changing?
The Difference Between Basic and Premium
Up until now, Microsoft has included a version of Copilot Chat inside the core Microsoft 365 apps for all users, whether or not they held a paid Copilot licence. This free version let staff ask Copilot questions, get help drafting content, and get quick answers from within Word, Excel, PowerPoint and OneNote.
From 15 April 2026, Microsoft is splitting this experience into two tiers for larger tenants.
The key point here is the 2,000-user threshold. If your tenant has fewer than 2,000 Microsoft 365 users, this change doesn’t apply to you yet. If you’re over that number, any user without a paid Microsoft 365 Copilot licence will lose access to Copilot inside the Office apps on 15 April.
Why Is Microsoft Drawing This Line?
Microsoft hasn’t published an exhaustive explanation, but the picture is fairly clear from the way the change is structured. Enterprise-grade AI with advanced reasoning, multiple model support and deep Microsoft 365 integration requires real infrastructure and commercial commitment.
Keeping that available for free across large tenants isn’t sustainable, especially as Microsoft has been building in multi-model capabilities, with both GPT and Anthropic’s Claude now available inside Microsoft 365 Copilot, as covered in our recent post on Claude AI now available in Microsoft 365 Copilot.
The smaller tenant exemption reflects a different calculus. For businesses under 2,000 users, Microsoft appears to be keeping the free tier available, at least for now, as part of a broader effort to grow adoption across the mid-market.
Who This Affects Most
The Teams That Will Feel It First
Not everyone in your business uses Copilot inside Word or Excel every day. But there are teams where in-app Copilot has quietly become part of how work gets done, and those are the ones that’ll notice the change most on 15 April.
From what I’ve seen working with Australian businesses, the functions that tend to rely most on in-app Copilot include:
If you haven’t mapped where Copilot is being used inside your business, now’s the time to do it. The Microsoft 365 admin centre and usage analytics can help you identify the users and groups who’ll be most affected.
The Cost Question
I know the immediate question for a lot of finance and IT leaders is going to be: “What does it cost to licence everyone who needs Premium access?”
Microsoft 365 Copilot pricing in Australia is currently around AU$49.39 per user per month on an annual commitment, and AU$51.87 on monthly billing. For a 2,500-seat business where even 10% of users rely on in-app Copilot daily, that’s a licensing decision worth getting right, not rushing.
The good news is that not everyone needs Premium access. You don’t need to licence every user in your tenant, just the ones who’ll genuinely use in-app Copilot in their day-to-day work. Getting that mapping right is the first step to a sensible budget conversation.
In our post Beyond the Licence Fee: Preparing Your Business for Microsoft Copilot Success, we’ve covered the real total cost picture in detail, and it’s worth a read before you make any licensing decisions.
What You Should Do Before 15 April
Step One: Find Out Who’s Using Copilot and How
Pull a usage report from the Microsoft 365 admin centre. Look at Copilot activity across Word, Excel, PowerPoint and OneNote and identify which users are actively using in-app Copilot at least a few times per week. These are the users most at risk of a disrupted experience after the change.
If you’ve already started a broader Copilot deployment, our Microsoft 365 Copilot Readiness Assessment can give you a structured view of where adoption is strong and where the gaps are.
Step Two: Build a Licensing Plan That Matches Your Use Cases
Once you know who needs Premium access, you can size your licensing properly. Think about it in three groups:
Copilot licensing has become more flexible in recent months, with month-to-month CSP billing options now available and extended promotional pricing for businesses with under 300 licences. Understanding which tier fits which user group can make a meaningful difference to both cost and adoption outcomes.
Step Three: Plan the Communication to Your People
This is the one I see businesses skip, and it always causes problems. If users don’t hear from IT or their manager before 15 April, they’ll open Word on the 16th, find that Copilot behaves differently, and start logging support tickets or assuming something is broken.
A short communication explaining what’s changing, why it’s changing and what to do if they need Premium access goes a long way. Keep it plain and practical. It doesn’t need to be a long document.
Step Four: Check Your Data and Security Settings
If you’re using this moment to expand your paid Copilot licences to more users, it’s also a good time to check that your Microsoft 365 environment is ready to support broader in-app AI use. That means reviewing SharePoint and OneDrive permissions so Copilot isn’t surfacing content it shouldn’t, checking sensitivity labels are applied to your most sensitive files, and confirming your conditional access policies are in good shape.
We’ve written about the security side of this in detail in Copilot Security Myths vs Reality and if your broader Copilot governance is something you’re still building out, our post on how to secure AI agents in Microsoft 365 covers the Entra Agent ID and Purview controls that are now available to help you do that properly.
Don’t Let This Change Become a Disruption
I’ll be honest: I’m glad Microsoft is making the distinction between Basic and Premium clearer.
It creates a better conversation about where AI is genuinely adding value inside a business versus where people are using it occasionally and getting modest benefit. That conversation is worth having.
What I don’t want to see is Australian businesses discovering this change at the worst possible moment, whether that’s during a busy end-of-quarter period, a tender process or a board reporting cycle.
The businesses that manage this well will spend a few hours now mapping usage, talking to their licensing partner and putting a short communication plan in place. The ones that don’t will spend more time and money cleaning up the mess in April.
If you’d like help thinking through your licensing position, planning the communication to your people, or checking whether your Microsoft 365 environment is ready for a broader Copilot rollout, we’d love to talk.
About the Author
Carlos Garcia is the Founder and Managing Director of CG TECH, where he leads enterprise digital transformation projects across Australia.
With deep experience in business process automation, Microsoft 365, and AI-powered workplace solutions, Carlos has helped businesses in government, healthcare, and enterprise sectors streamline workflows and improve efficiency.
He holds Microsoft certifications in Power Platform and Azure and regularly shares practical guidance on Copilot readiness, data strategy, and AI adoption.
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