Microsoft Copilot Agents – demystified?!

Posted on August 1, 2025 by Rob May

Let’s talk about agents. Not secret ones. Not estate ones. Not even the chatbot kind we used to know. I mean Microsoft Copilot agents and the rising tide of confusion that surrounds them!

In my AI sessions recently, I keep hearing questions like:
“Do we already have agents in Copilot?”
“Is this the same as ChatGPT agents?”
“Do we need Copilot Studio to build one?”

These are all fair questions. But here’s the problem, Microsoft is now using the word “agent” in several different places for things that behave quite differently. So I thought it would be useful to try and untangle it.

First, not all agents are the same!
There are now three types of agent experiences in Microsoft’s AI ecosystem. Only one of them behaves like the kind of assistant most people imagine when they hear the word.

Let’s start with the most capable one.

1. Copilot Studio Agents – the doers

These are the real deal. They are smart, proactive assistants that you build in Copilot Studio. They can take action across systems, remember things over time, ask questions, follow up later, and work toward defined goals. They are not just for answering questions. They are for doing the work. But, and it’s a big but, you need a Copilot Studio licence and some developer knowhow to create them. These don’t come built-in with your Microsoft 365 Copilot licence. You design them with logic, permissions, access to data, and workflows. Think of these agents as digital team members. You build them once and they run tasks over time.

2. Copilot Chat Agents – the talkers

These live inside Copilot Chat and they behave more like Custom GPTs in ChatGPT. You can create them through a simple interface. You give them a name, a tone of voice, and a source of knowledge such as your HR policies or internal documentation. They don’t take actions. They don’t remember anything from one chat to the next. But they are friendly, informed, and available 24/7.
These agents are conversational, not autonomous. They work best when you want something helpful and consistent, but not responsible for doing anything. You don’t need Copilot Studio to create them.

3. Built-in Copilot – not really agents at all

Then we have the Copilot tools that are simply part of Microsoft 365 apps: Word, Excel, Outlook, Teams, SharePoint.
They help you draft text, summarise meetings, build presentations, and clean up spreadsheets. They are brilliant. But they are not really agents (even if Microsoft helpfully name them as such). They don’t take action outside the app you are in. They don’t remember anything from session to session. And you don’t build or configure them, they just work.

4. Azure AI Agents – behind-the-scenes copilots

And just to keep things interesting, there’s a fourth category: Azure AI agents. These are not visible to end-users in Microsoft Teams or Outlook. Instead, they are embedded behind the scenes into applications – often acting as copilots within business systems. So, while Copilot Studio agents are surfaced to users within Microsoft 365 apps, Azure AI agents are embedded by developers inside bespoke solutions. They work in the background, powering smart capabilities inside business platforms.

That’s the confusion in a nutshell. Here’s how it looks in practice:

So why is this a problem?

Because Microsoft is using the same word “agent” to describe tools that behave completely differently. That might be fine for product teams, but for the rest of us, it muddies the water. One minute we are told we already have agents. The next, we are told we need to build them. Then comes the licence conversation. And now we are in a room trying to figure out what anyone actually means. If you are using Copilot to help you work faster inside Microsoft 365, you don’t need to worry about agents. If you want to build something that does the work for you, connects to systems, and handles tasks over time, you are talking about a Copilot Studio agent. If you just want a friendly AI to help people find information, a Copilot Chat agent is a great step forward. And if your business systems are embedding intelligence behind the scenes, that’s likely thanks to Azure AI agents.

So next time someone says, “Let’s build an agent,” ask two things:

✅ Does it just need to talk, or does it need to act?

✅ Are we using it, or are we building it?

That’s where clarity starts.

Harnessing AI: A Leadership Masterclass

This masterclass offers AI training to help business leaders to gain a comprehensive understanding of the rapidly evolving landscape of AI and machine learning.

Tell us how we can help

First Name*

Last Name*

Email*

Phone Number

Job Title

Company

IT service interested in*Outsourced IT SupportProjects & ConsultancyIT StrategyCybersecurityCybersecurity TrainingCyber Resilience CertificationIT AuditsAIMicrosoft 365SharePoint ConsultancyCloud MigrationPower BI

How we can help

The data you supply will be used to contact you regarding your enquiry and to communicate relevant technology news.

Δ