Somewhere around the middle of April, someone on your team opened Word to draft a client letter and found the Copilot panel gone. They assumed a glitch and waited for it to come back. What looked like a fault was Microsoft enforcing a licensing boundary that had always existed on paper. On 15 April 2026, the free tier of Copilot stopped working inside Word, Excel, PowerPoint and OneNote for unlicensed users in larger tenants, and became a throttled, nagging experience in smaller ones.
So the owner now holds a decision that used to be free. Pay per seat, or tell everyone to use the separate chat window. The price list is the easy part. The harder question is whether the work in your business needs AI inside the documents and meetings themselves.
What actually changed on 15 April 2026?
On 15 April 2026 Microsoft removed the built-in Copilot Chat pane from Word, Excel, PowerPoint and OneNote for users without a paid Microsoft 365 Copilot licence in tenants with more than 2,000 seats. Smaller tenants kept the in-app experience, but downgraded to standard access, with throttling during busy periods and persistent upgrade prompts. Copilot Chat itself survives, free, in the standalone app, Outlook and Teams.
Microsoft made the split visible with labels under each user’s name in the Microsoft 365 home experience. Copilot Chat (Basic) means no Copilot pane inside Word, Excel, PowerPoint or OneNote at all. M365 Copilot (Basic) means the pane remains but under standard access, which fluctuates at peak times. M365 Copilot (Premium) means a paid seat with priority access. Checking those labels is the quickest way to diagnose who on your team lost what.
The change landed hard because Copilot had spent months as an unannounced bonus. Licensing analysts at SAMexpert estimate Microsoft had given around 450 million Microsoft 365 users free access to Copilot inside the Office apps before withdrawing it, and few teams knew they were relying on an entitlement that could be gated. Firms inside larger shared tenants run by an IT provider were counted against the bigger seat total, which is why some ten-person teams lost the pane entirely.
When is the free Copilot Chat tier enough?
Copilot Chat is enough when the work is general drafting, research and email. Every user on an eligible Microsoft 365 Business plan gets secure, web-grounded chat, file uploads, image generation and Copilot in Outlook with inbox and calendar awareness, at no per-seat cost and under the same enterprise data protection terms as the rest of Microsoft 365.
The free tier is more capable than the April change made it feel. Staff can upload files up to 512 MB and ask for summaries, rewrites or analysis. Copilot in Outlook still reads the inbox and calendar it sits in, so anyone can have a long email thread summarised or a reply drafted without a licence. Web queries run through Bing with user and tenant identifiers stripped out, and Microsoft has committed that prompts and responses are not used to train the underlying models.
What the free tier will not do is roam your organisation’s content. It sees a document only when someone uploads it or has it open in a supported surface, so it cannot pull last year’s proposal or trace the decisions made across a project. For roles whose work is transactional, a bookkeeper raising invoices, front-office staff managing diaries, field staff who mainly need email summarised, that limitation rarely bites. Chat plus Outlook covers them well.
When does the paid licence earn its seat?
The paid licence earns its seat when someone’s core work happens inside documents and meetings and depends on organisational context. Microsoft 365 Copilot grounds its answers in that person’s emails, files, chats and meetings through Microsoft Graph, drafts inside Word and PowerPoint, analyses data in Excel, summarises Teams meetings, and runs agents such as Researcher.
The difference shows in the work. A senior consultant can ask licensed Copilot to find the last three proposals for a client and draft a new one with updated scope, because Graph grounding lets it read whatever that person already has permission to see. An operations manager can turn a week of Teams meetings into minutes and action lists without touching a transcript. On the free tier, both jobs collapse into manual uploads and copy-and-paste.
There are prerequisites. Graph grounding only reaches content held in Exchange Online, OneDrive and SharePoint, so a firm still keeping key documents on a local shared drive will pay for capability it cannot use until that content migrates. And the licence is a real recurring cost. Copilot Business lists at 21 US dollars per user per month, with promotional pricing of 18 dollars through resellers until the end of 2026, which UK providers typically mirror at around £14. I have covered the product naming and the full cost picture in Microsoft Copilot for business, and the Business vs Enterprise choice separately.
Mapped against the roles in a typical firm of twenty, the owner, two or three client-facing managers and a senior specialist or two make the strongest case, five to eight seats rather than twenty. Finance sits in the middle, worth a seat where spreadsheet analysis is heavy. Administrative and field roles rarely justify one.
What does getting this call wrong cost?
License every seat in a 20-person firm and you commit to roughly £3,300 a year at current promotional rates before anyone has shown the seats earn their keep. Under-license and the cost is less visible, your most document-heavy people fall back on copy-and-paste workarounds, or drift to personal AI accounts outside your enterprise data protection terms.
The evidence for the paid seat is real but comes from bigger organisations. Microsoft’s Work Trend Index found early Copilot users saving around fourteen minutes a day, and 77 per cent said they did not want to go back to working without it. Forrester’s Total Economic Impact analysis put productivity savings at 108 hours a year per user in a composite enterprise. A twenty-person firm will not match enterprise meeting loads, so treat these numbers as direction and gather your own before scaling the spend.
Under-licensing carries a governance edge as well as a productivity one. Staff who lose a tool they relied on tend to route around the loss, and personal ChatGPT or Copilot accounts sit outside the contractual protections your Microsoft 365 tenancy carries. The ICO expects UK GDPR discipline to apply to AI tools whichever tier you use, and the NCSC asks that someone in the business owns the security decisions around them. A deliberate split, decided and communicated, beats an accidental one.
What should you ask before you decide?
Before buying any seats, work out who actually lost something in April, whose work depends on internal context rather than the open web, and whether your files and mailboxes are in the cloud services Copilot can reach. Then pilot a handful of licences for a fixed period and let the evidence, rather than the price list, settle the decision.
Start with the April diagnostic. Ask each manager which of their people were actively using Copilot inside Word, Excel or PowerPoint before the change, who lost access or hit throttling, and who never noticed. The people who felt the removal are your licence candidates. The people who never noticed almost certainly are not.
Then test the context question. If someone’s output depends on past proposals, client email history and meeting decisions, Graph grounding earns its money. If their work runs on the open web and their own inbox, the free tier covers it.
Run the pilot before the rollout. License three to five people whose roles make the strongest case, give them six to eight weeks, and ask for a short weekly note on where Copilot materially helped and where it fell flat. Review the notes against the seat price, extend the licences that earned their keep, and revert the ones that did not.
The boundary Microsoft drew in April is the decision. Where the work lives inside documents and meetings, pay for those seats and expect them to earn it. Where it does not, the free tier remains a capable tool. If you would like a second pair of eyes on which seats to license before you commit, book a conversation.
