Invest2 publishers3 min readPublished
Copilot's new coding and agent tools will be billed by consumption outside the seat license
Microsoft's new Copilot app bills coding and agents by use, while fewer than 7% of over 450 million commercial 365 seats pay for Copilot. Usage billing lets Microsoft charge its existing Copilot customers more whether or not the unlicensed majority ever signs up.
The Investor · Invest desk
What happened
- The app has three sections: Home joins chat, the Cowork delegation tool and full Word, Excel and PowerPoint; Code builds apps from plain language; Autopilot runs always-on agents.
- Microsoft had sold Microsoft 365 Copilot and the GitHub Copilot coding agent as separate products before putting both into the one app.
- Copilot chief Jacob Andreou told CNBC that adding coding to the app was a case of Microsoft playing catch-up.
- Home and Code roll out to Frontier early-access customers in the coming weeks, and Autopilot enters an expanded private preview by the end of September.
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Why it matters
- cost A customer that turns on Cowork, Code or Autopilot adds a usage bill to its monthly seat charge, so its Copilot spend will depend on how much the agents run as well as on how many staff hold licenses.
- constraint Once coding and agents are billed on use, paid seats (the count behind the sub-7% adoption rate) stop measuring Copilot revenue on their own, and investors will need a consumption figure to judge the relaunch.
- exposure The newest frontier models are metered too, so the cost of heavy use of partner models from OpenAI and Anthropic lands on the customer's bill and stays out of Microsoft's fixed seat price.
Divide the two seat figures and they agree: 30 million paid seats over 450 million commercial seats is about 6.7% [8], inside the fewer-than-7% share CNBC reported [6]. That leaves roughly 420 million Microsoft 365 seats without a Copilot license [9]. Both reports on Friday's launch describe it as a push to widen Copilot adoption among business customers [1][16]. Quartz also names competition from Anthropic and OpenAI as a motive [1].
The price list points at a second target, or rather at the customers Microsoft already has. The seat license still covers chat and the Copilot features in Word, Excel, PowerPoint, Outlook and Teams. Cowork, Code, Autopilot and the newest frontier models go on a consumption meter [10]. Satya Nadella told investors in July that the company is moving "beyond per-seat to per-seat-plus-consumption," according to GeekWire [11]. Meter revenue depends on how much the tools get used. I'd expect the heaviest early users of always-on agents that watch email and Teams channels [3] to be organisations already paying for seats. The company did not disclose prices for either charge [10].
If the single app pulls some of the unlicensed 420 million into paying [9], the seat count climbs well past July's figure. If seats stay near 30 million [7] while metered revenue grows from existing customers, Copilot makes more money and its adoption rate barely moves. A third outcome is that the new tools stay in early access long enough that neither number shifts before Ignite on Nov. 17-20 [15]. I think the price list is built for the second outcome: everything new is metered, and everything the seat covers, it covered before [10]. The counter-case is the Home tab. Full versions of Word, Excel and PowerPoint inside Copilot [2] give people who already work in those apps a reason to open it at all. A seat disclosure well above the 30 million reported in July [7] would prove the adoption reading right and this one wrong.
Microsoft's own models appear only where users get to pick. Code offers several models, including one from Microsoft, but none of Microsoft's is among the options in Home, according to CNBC [12]. OpenAI's GPT-5.6 is the preferred model for Microsoft 365 Copilot, even as Microsoft builds out its own MAI family [13], and Copilot still draws on Anthropic's models as well [4]. So the tab meant for the broadest group of office workers runs on partners' models [12]. Jacob Andreou, Microsoft's executive vice president for Copilot, told CNBC the company is "holding a very high bar" [19].
Shares rose more than 3% in Friday morning trading [20]. At that point nobody outside Microsoft's early-access and preview programs could run the new tools [14].
What to watch
- Whether Microsoft requires a Copilot seat license to run the metered tools; if it does not, the meter becomes a route into the roughly 420 million unlicensed seats.
- Whether Autopilot moves beyond private preview at Ignite, Nov. 17-20 in San Francisco.
- Whether Microsoft adds one of its own models to the options in the Home tab.