What changes with Wave 3 of Copilot in Microsoft 365
Microsoft had been building Copilot as a smart assistant integrated into Microsoft 365 apps, helping users draft emails, summarize meetings, and create presentations. With the arrival of Wave 3, however, the leap is of a completely different nature. Now the platform goes beyond being just a copilot that makes suggestions and starts operating as a true agent capable of running entire workflows without needing constant oversight. This means tasks that previously required multiple clicks, app switching, and manual decisions can be delegated to AI agents that understand context, access data from different sources, and deliver results ready for review.
The concept Microsoft has dubbed Frontier Transformation sums up the philosophy behind this update pretty well. According to the company, AI needs to go beyond optimizing what already exists — it should unlock new levels of creativity, innovation, and growth. For this to actually work, two elements are essential: intelligence and trust. Intelligence ensures the AI is contextual, relevant, and grounded in real data. Trust ensures everything scales in a secure, protected, and responsible way. The Wave 3 announcements show how these two pillars, working together, transform AI from an isolated experiment into lasting value for the entire organization.
Think of a scenario where an agent analyzes quarterly sales data, cross-references it with customer satisfaction information stored in SharePoint, identifies churn patterns, and puts together a preliminary action plan inside Teams — all before you finish your morning coffee. Wave 3 aims to make this kind of operation routine, accessible, and most importantly, secure within the corporate ecosystem.
Copilot Cowork and the partnership with Anthropic
One of the most noteworthy highlights of this update is Copilot Cowork, a feature built in direct partnership with Anthropic, the company behind the Claude model. For the first time, Microsoft is bringing the technology that powers Claude Cowork into Microsoft 365 Copilot. In practice, this significantly expands the platform’s reasoning and execution capabilities.
Copilot Cowork introduces the concept of long-running, multi-step work inside Copilot. Instead of operating in the classic question-and-answer mode, Cowork lets you delegate complex tasks that unfold over minutes or even hours. The agent can break down a request into steps, reason across different tools and files, and move the work forward while showing progress transparently. The user can follow along, redirect, or even stop it at any time.
This capability is supercharged by Work IQ, which gives Copilot the full context of your work — not just fragments of data. It considers files, meetings, chat conversations, and even the user’s professional relationships to deliver more accurate and relevant results. Documents generated during the process are born as protected corporate knowledge, ready for sharing and governance.
Cowork was designed from the ground up to meet enterprise needs. Actions are transparent, progress is observable, and everything operates within Microsoft’s security, identity, and governance framework. The feature is currently being tested in a research preview with a limited group of customers and will become available through the Frontier program in March.
Supercharged Copilot in Word, Excel, PowerPoint, and Outlook
Wave 3 brings a significant evolution for Copilot inside the core productivity apps. Now the assistant works side by side with you in Word, Excel, PowerPoint, and Outlook, creating, editing, and refining high-quality content from start to finish — all within the document, spreadsheet, presentation, or email itself.
Microsoft points out that many AI tools treat document creation as a one-shot task. They might connect to Microsoft 365 data, but they lose important context, generate content that doesn’t follow the native logic of the apps, and produce versions scattered across locally downloaded files. Not to mention they frequently ignore the organization’s confidentiality protections.
With Wave 3, Copilot does the real heavy lifting:
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- In Word, it refines drafts into polished, well-structured documents
- In Excel, it enhances spreadsheets with real formulas and contextualized analysis
- In PowerPoint, it creates slides that respect the organization’s layouts, object styles, and brand kits
- In Outlook, it drafts and refines emails directly in the interface
All of this uses Work IQ to keep content grounded in the real context of your work. Every change is transparent, reviewable, and reversible as the user iterates. And since the work happens inside the apps where people are already used to working, there’s none of that friction from switching between different tools.
During the preview period, Microsoft called these capabilities Agent Mode. But as the feature approached general availability, it became clear that this isn’t a separate mode — it’s simply how this new generation of Copilot works.
An important note: Copilot maintains Microsoft 365 permissions and sensitivity labels, saving files to OneDrive and SharePoint with tenant-level controls. Protected content isn’t processed when extraction isn’t allowed, which ensures governance, auditing, compliance, and retention policies are enforced at scale. The new experiences are already available in Excel and Word, with PowerPoint and Outlook beginning to roll out over the coming months.
Agents in chat and the power of conversation as a starting point
Not all work starts inside a document or app. Many times, everything begins with a conversation — a question, an idea, or a vague intention that needs to turn into concrete action.
That’s why in Wave 3, the Copilot chat becomes the entry point for conversation-driven creation and execution. From chat, you can create documents, spreadsheets, and presentations directly from a conversation, or ask Copilot to handle common everyday actions — like scheduling a meeting or drafting and sending an email to the team — without needing to copy and paste between tools or switch contexts.
Chat is also where the ecosystem connects. Built-in agents for Word, Excel, PowerPoint, and Outlook let you seamlessly transition from a conversation to native work inside the apps. And with support for open standards like Apps SDK and MCP Apps, third-party applications can now show up directly inside chat — enabling interactive, live experiences right where work actually happens.
The integrations mentioned by Microsoft include sales and customer service insights from Microsoft Dynamics 365, custom apps built with Microsoft Power Apps, and partner experiences from Adobe, Monday.com, and Figma. All brought together in one place.
To make agent creation easier, Copilot offers the Agent Builder, which lets people across the organization build agents that support their daily work. Meanwhile, IT and business leaders can create more sophisticated process agents using Microsoft Copilot Studio — from employee onboarding to procurement processes. Recent Copilot Studio updates help organizations evaluate agent quality, coordinate multiple agents, and ensure they all work together across systems — while maintaining observability, governance, and security at enterprise scale.
The Excel, Word, and PowerPoint agents are rolling out to general availability in Copilot chat. Scheduling via chat and custom instructions are already available, and sending emails through chat is expected to reach broad availability this spring.
Multi-model intelligence: the best of every world
Wave 3 also advances Microsoft’s commitment to model choice within Copilot. The idea is that intelligence shows up in the right way for the job at hand, without the user needing to worry about which model is running behind the scenes.
Microsoft points out that many AI tools lock users into a single vendor’s models. Others force people to choose between different tools, experiences, or modes depending on the task. This fragmentation creates friction for individuals and complexity for organizations. Leaders end up managing overlapping tools, inconsistent experiences, and rising costs as teams bring their own AI solutions into the corporate environment.
With Wave 3, Claude is available in the main Copilot chat through the Frontier program, alongside the latest generation of OpenAI models, which continue to roll out with new releases. Users access advanced reasoning and multi-step execution capabilities in their everyday Copilot conversations — not just in specialized tools. Copilot automatically applies the most suitable model for each task, always grounded in the user’s corporate context and protected by Microsoft’s security and governance controls.
This multi-model approach is what sets Copilot apart from other solutions on the market. Your work isn’t limited to a single brand of models. Copilot hosts the industry’s best innovations and picks the right model for each job, regardless of who built it. And this pattern is only going to get more powerful as new models and ways of working emerge.
Agent 365: the control plane for enterprise agents
As organizations adopt agents as part of their daily work, the challenge shifts from experimentation to operating with confidence, security, and control at scale. According to projections from IDC, agent usage is expected to grow by an order of magnitude in the coming years, with hundreds of millions — and soon billions — of agents operating in companies around the world. This scale creates a new dilemma for IT and security leaders: how to manage agents across the entire organization without rebuilding infrastructure, weakening security posture, or slowing down innovation.
This is exactly the scenario Agent 365 was designed for. It’s the control plane for agents. In practice, it gives IT and security leaders a single place to observe, secure, and govern every agent in the organization, providing the confidence needed to move beyond the experimentation phase and operate at enterprise scale.
The philosophy is simple: you don’t need to reinvent the wheel. The fastest path to getting agents under control is managing them similarly to how you manage users, using familiar Microsoft solutions — including the Microsoft Admin Center for agent management and security solutions like Defender, Entra, and Purview for agent security and governance.
Agent 365 will be generally available on May 1, priced at 15 dollars per user per month.
Microsoft 365 E7: the Frontier Suite for enterprises
Frontier transformation becomes real when both sides of the system advance together: people and AI operating across the entire enterprise. Microsoft 365 E7: The Frontier Suite closes this gap, equipping employees with AI across emails, documents, meetings, spreadsheets, and business application surfaces, while giving IT and security leaders the observability and governance needed to operate AI at enterprise scale.
Copilot and agents work together with shared intelligence, understanding context, history, priorities, and constraints. Trust is built in by default — with user data, corporate data, and agent actions protected by identity, policies, and observability — so AI scales across the workforce without compromising security or compliance.
Microsoft 365 E7 will be available for purchase on May 1 at a retail price of 99 dollars per user per month, including Microsoft 365 Copilot, Agent 365, Microsoft Entra Suite, and Microsoft 365 E5 with advanced security capabilities from Defender, Entra, Intune, and Purview to protect users, delivering comprehensive protection across both agents and users.
Security and governance as non-negotiable pillars
With autonomous agents accessing sensitive data and executing actions on behalf of users, the question of security naturally becomes the elephant in the room. Microsoft seems to have anticipated this concern and placed governance as one of the central pillars of Wave 3. Each agent operates within the compliance policies and permissions already configured in the organization’s environment, using Microsoft Purview for data classification and protection and Microsoft Entra ID for identity and access control.
This means an agent will never access information that the user who created it doesn’t have permission to see, keeping the chain of trust intact even in high-automation scenarios. Documents created by Copilot Cowork, for example, are born as protected corporate knowledge ready to be shared within the organization’s rules.
On top of that, Microsoft has implemented additional layers of auditing and traceability specifically for agents. Every action executed is logged, every decision made by the AI model is documented, and administrators can review the complete history of operations at any time. This level of transparency is essential for companies operating in regulated industries like healthcare, finance, and government, where the ability to explain why a particular decision was made isn’t a differentiator — it’s a legal requirement.
Wave 3’s security approach also addresses emerging threats related to the use of generative AI, such as prompt injection, data leakage through model responses, and misuse of agents by bad actors. Microsoft has expanded Defender and Purview capabilities to specifically monitor interactions with Copilot and its agents, allowing security teams to identify anomalous behavior in real time and take corrective action before any incident materializes. It’s a layer of protection that recognizes that as AI gains more autonomy, control mechanisms need to evolve at the same speed — or even faster 🔒
What to expect in practice
For those already using Microsoft 365 day to day, the transition to Wave 3 features should happen gradually. Many of the agentic capabilities are already being rolled out — the new experiences in Excel and Word are already generally available, while PowerPoint and Outlook are beginning to roll out over the coming months. The more advanced features, like Copilot Cowork, are in research preview with a limited group of customers and will reach the Frontier program in March.
The important thing here is that this isn’t a revolution that requires platform migration or infrastructure overhaul — everything works within the environment companies already know, with the same interface, the same apps, and the same security policies already in place.
The partnership with Anthropic also signals an interesting path for the future of Copilot. By integrating models like Claude directly into the main chat, Microsoft opens the door to a multi-model ecosystem where each task can be processed by the AI best suited for that specific context. This is particularly relevant for tasks that require complex reasoning, long document analysis, or content generation with nuances that a single model might not capture with the same quality. In practice, the end user doesn’t even need to know which model is running behind the scenes — the experience stays fluid and integrated, while the quality of responses and actions tends to level up.
To start exploring the new features, Microsoft recommends visiting Microsoft365.com/copilot or downloading the Microsoft 365 app on your phone. Microsoft’s WorkLab also offers updated research and insights about AI at work. And for those who want to dive into the technical details, the company is hosting the Microsoft Frontier Transformation digital event on March 9, 2026, at 8 AM Pacific Time, where engineering leaders will explain how Microsoft delivers AI built for the enterprise environment.
At the end of the day, Wave 3 represents Microsoft’s clearest bet that the future of enterprise work runs through AI agents that don’t just assist but actually execute. With multi-model intelligence, Work IQ bringing deep context, and a robust security and governance framework, the company is trying to address one of the biggest objections IT leaders still have about mass AI adoption in the corporate environment. When intelligence and trust go hand in hand, AI stops being an experiment and starts becoming the way work gets done. The coming months will show whether this promise translates into real results for organizations that jump on board this new phase of Copilot in Microsoft 365 🚀
