Copilot Studio
Microsoft's low-code/no-code SaaS platform for building AI agents. Formerly Power Virtual Agents. The right tool when business users need to own the agent, when deployment to Teams or M365 Copilot is the goal, or when Power Automate workflows are the action layer.
When not to use it: when you need custom RAG, complex orchestration, custom model selection, or non-Microsoft infrastructure.
Copilot Studio vs Microsoft Foundry
| Dimension | Copilot Studio | Microsoft Foundry |
|---|---|---|
| Who builds it | Business users, power users | Developers, ML engineers |
| Interface | Visual canvas, natural language | SDK, code, portal |
| Infrastructure | SaaS - Microsoft managed | Azure PaaS - customer managed |
| Models | Microsoft-selected | All 1,900+ Foundry Models |
| Custom orchestration | No | Yes (via MAF) |
| RAG | Via Foundry IQ or Dataverse | Full control |
| Distribution | Teams, M365, web, Dynamics, mobile | Via Copilot Studio publish pipeline |
| Governance | DLP, Entra, environment isolation | RBAC, networking, ACS |
| Pricing | Per message | Per model inference + agent run |
Architecture
Knowledge Sources
Connect agents to enterprise knowledge without custom RAG. Copilot Studio handles chunking, indexing, and retrieval:
| Source | What it indexes |
|---|---|
| SharePoint | Documents, libraries, pages, lists |
| Dataverse | Business application data, tables |
| Websites | Public pages, intranet portals |
| Uploaded files | PDFs, Word, Excel, PowerPoint |
| Foundry IQ | Enterprise knowledge bases built in Microsoft Foundry |
| Fabric IQ | Fabric semantic models, OneLake data |
| Work IQ | Microsoft 365 data (email, Teams, calendar) - preview |
Using Foundry IQ as a knowledge source is the recommended path for grounding Copilot Studio agents in structured enterprise data. Build the knowledge base in Foundry (with permission sync and layout-aware chunking), then wire it into Copilot Studio.
Actions
Agents do more than answer - they act across systems:
| Action type | Examples |
|---|---|
| Power Automate flows | Create service tickets, send approvals, update CRM |
| HTTP / REST API calls | Any system with an API |
| Pre-built connectors (1,000+) | Salesforce, SAP, ServiceNow, Jira, Workday |
| Agent flows | Multi-step automated workflows |
| Computer-using agents (GA May 2026) | Interact with websites and desktop UIs directly |
Computer-using agents are the standout addition in 2026. Agents interact with actual UI - browser automation, desktop application control - without API access. Useful for legacy systems that lack APIs.
Agent Types
| Type | When to use |
|---|---|
| Conversational | Multi-turn Q&A over knowledge sources - IT help desk, HR FAQs |
| Task agent | Execute a specific process end-to-end - expense submission, onboarding |
| Autonomous agent | Run on a schedule, monitor conditions, take action without user trigger |
| Computer-using agent | Automate UI-driven processes on systems without APIs |
| Voice agent | Real-time voice interactions |
Multi-Agent
Copilot Studio agents can orchestrate other agents:
- Agent-to-Agent (A2A) - delegate to specialist agents based on intent
- M365 Agents SDK orchestration - integrate with Teams-native agents
- Foundry-built agents as specialists - build the complex logic in Foundry, expose it as a Copilot Studio skill
Integration with Microsoft Foundry
Two integration patterns:
1. Publish Foundry agents to Copilot Studio channels Build the agent in Foundry (full control, custom RAG, complex orchestration) then publish it to Teams and M365 Copilot through the Copilot Studio distribution pipeline.
2. Use Foundry IQ as knowledge source in Copilot Studio Business users build their agent in Copilot Studio. Ground it in Foundry IQ knowledge bases that have enterprise ACL sync, layout-aware chunking, and permission-trimmed retrieval.
Distribution Channels
| Channel | Status |
|---|---|
| Microsoft Teams | GA |
| Microsoft 365 Copilot | GA |
| Website (chat widget) | GA |
| Dynamics 365 | GA |
| Mobile apps (Bot Framework) | GA |
| Facebook Messenger | GA |
| GA |
Governance
| Capability | What it enforces |
|---|---|
| Entra ID authentication | Every agent interaction is authenticated - no anonymous access unless explicitly allowed |
| DLP policies | Prevent sensitive data flowing through connectors - enforced across all agents in the tenant |
| Environment isolation | Dev, test, production environments with separate data and settings |
| Audit logs | All agent interactions logged to Power Platform admin centre |
| Sensitivity labels | Inherited from source data through knowledge sources |
| Admin centre controls | Tenant admins can enable/disable features, set quotas, view all agents |
Cost
Copilot Studio uses message-based pricing:
| Component | Billing |
|---|---|
| Standard messages | Included in M365 Copilot license or billed per message |
| Generative AI messages | Higher rate (LLM inference cost embedded) |
| Premium connectors | Per connector usage above included allowance |
| Power Automate flows | Separate Power Platform licensing |
Copilot Studio pricing | Copilot Studio portal
Getting Started
| Resource | Link |
|---|---|
| Create your first agent | Quickstart |
| Add knowledge sources | Knowledge docs |
| Publish to Teams | Publish guide |
| AI capabilities overview | AI capabilities |
| Copilot Studio vs Foundry decision | Decision guide |
Key Takeaways
- Copilot Studio is the distribution layer, not the orchestration layer. Build complex agents in Foundry/MAF, then publish them through Copilot Studio to reach Teams and M365 users.
- Computer-using agents (GA May 2026) are the standout capability for legacy system automation - interact with any UI without needing an API.
- Use Foundry IQ as the knowledge source, not raw SharePoint indexing, when you need permission-trimmed retrieval with layout-aware chunking.
- DLP policies are enforced across all agents in the tenant through the admin centre - governance is not opt-in per agent, it's tenant-wide.
- Per-message pricing means conversational agents can get expensive at scale. Estimate average messages per session before committing.