Many thanks to AudioCodes, this month's community Benefactor, for all their support of the community. I caught up with them last week at M365 conf for the latest news LI / YT.
Lots to talk about in the last 2 weeks. Microsoft Q3 FY26 earnings, the OpenAI partnership has been formally restructured (again), Agent Mode is now the default in Word, Excel and PowerPoint, GPT-5.5 is rolling out across Copilot surfaces, and GitHub Copilot is moving to usage-based billing. I wonder when we will see that for M365?
Oh, and M365 conf too! Check out my breakdown of the Teams Keynote here.
Microsoft 365 AI Workplace Briefing Video - April 2026
You can check out my April update video briefing to get all the news in under 15 minutes on YouTube, LinkedIn and on the podcast.
Q3 FY26 Earnings — Copilot at 20M paid seats, Azure +40%
Microsoft posted $82.9B revenue, with Azure growing 40% and the AI business hitting a $37B annual run rate (up 123%).
The headline number for our world: M365 Copilot is now at over 20 million paid seats, up from 15M in January. Still a small % of the overall 450M+ M365 user base, but % wise huge growth in paid seats.
Satya called out that "weekly Copilot engagement is on par with Outlook",—which, if true at that scale, would be a huge adoption signal. I'd like to have had a number.
GitHub Copilot is now in nearly 140,000 organisations, and Security Copilot customers doubled year-on-year.
It was also interesting to hear on the earnings call that Microsoft might be moving to their own models to power transcription on Teams:
"We introduced MAI-Transcribe-1, a state-of-the-art speech-to-text model, and MAI-Image 2, one of the top image generation models in the world. These models are already powering first-party scenarios like image generation in Bing and PowerPoint, and we are working towards having Transcribe-1 power transcription in Copilot and Teams."
We also got this: "Tens of thousands of companies are already managing tens of millions of agents in Agent 365."
Satya's earnings recap on LinkedIn.
The Microsoft–OpenAI partnership has been formally restructured
The biggest strategic story of the month. Microsoft and OpenAI announced an amended agreement on April 27 that ends some of Microsoft's exclusive commercial rights to OpenAI IP. OpenAI can now serve customers on any cloud—and Amazon announced that it will distribute OpenAI models on AWS.
Microsoft retains royalty-free access to OpenAI's models and IP through 2032, and stays the primary cloud partner where OpenAI products will ship first "unless Microsoft is unable or unwilling to supply necessary capabilities". The longstanding AGI clause — which would have voided Microsoft's IP rights upon AGI being declared — is gone. Simon Willison has a good walkthrough of how that clause evolved.
On the earnings call, Nadella said Microsoft "fully plans to exploit" its access through 2032. Combined with the multi-model story we've been tracking (Anthropic in Copilot, GPT-5.5 rolling out, the Council/Critique pattern in Researcher), Microsoft is clearly trying to be more independent of OpenAI and truly multi-model. We are seeing this with many Anthropic users migrating to Microsoft 365 services.
Agent Mode is now the default in Word, Excel, and PowerPoint
This one slipped out without a huge fanfare, but it's a meaningful shift. Agent Mode is now generally available and the default experience across Copilot in Word, Excel and PowerPoint. Satya's framing: "give an agent that canvas to reason over, and a single prompt can reshape the model, the bridge, and the narrative at once". Microsoft blog.
Anthropic models will be used by default if enabled in your tenant. MC1269241
This finally moves M365 Copilot in Office apps from the app sidebar chat to actual engagement with the content open in the app.
Copilot in Outlook goes agentic too
Agent Mode is now in Outlook via the Frontier early access programme. It will triage emails, reschedule conflicts, and surface what matters across your inbox and calendar.
This is the "always-on" Outlook agent Microsoft have been hinting at for a while. I'm going to put it through its paces.
GPT-5.5 and ChatGPT Images 2.0 in M365 Copilot
GPT-5.5 is rolling out across GitHub Copilot, M365 Copilot, Copilot Studio and Foundry, alongside ChatGPT Images 2.0. Stronger multistep reasoning, better long-task performance.
It's also a good example of the multi-model pattern in action — in GitHub Copilot CLI, you pick faster models for scaffolding, deeper reasoning models for planning, and GPT-5.5 to actually execute. The Rubber Duck agent in GitHub Copilot lets one model review another's output, which is the same Critique/Council pattern Microsoft is using in Researcher.
GitHub Copilot is moving to usage-based billing — June 1
Premium request counting is going away. From June 1, every GitHub Copilot plan will include a monthly allotment of GitHub AI Credits, with paid plans able to buy more. Usage will be metered on token consumption — input, output, cached and reasoning tokens.
Mary Jo Foley has a good breakdown of the implications. Simon Willison covered the individual plans changes.
This is part of a much wider pattern — Atlassian, HubSpot, and others are all moving away from flat per-seat AI pricing. The per-seat subscription model that has underpinned enterprise software for 20 years doesn't really work when costs are dominated by inference. Surely, with things like M365 Copilot Cowork around the corner, we are going to see some kind of AI consumption model in M365 too(?).
EU Copilot Flex Routing — A GDPR Risk?
I covered Flex Routing in the last issue — Microsoft enabling LLM inference to burst outside the EU Data Boundary during peak demand, on by default from April 17. MC1269223 and MC1269219. Though I gather only for smaller tenants/customers.
If your business operates in the European Union or the European Free Trade Association (EFTA) and is subject to GDPR, and you got the above messages, do review this setting and your choice.
This is exactly the kind of change that lives in the message centre and gets missed (I can help with that :)
Planner Agent in M365 Copilot
Planner Agent brings work management directly into M365 Copilot. It can pull in tasks from across M365 surfaces and let you action them from the Copilot canvas — another step toward Copilot as the front door rather than a feature inside an app.
Some great capabilities are coming to Planner, including improved API and MCP. I broke down the M365 Conf session here.
New Microsoft 365 Audience-based update model — Frontier, Standard, Deferred
Microsoft is reworking the Microsoft 365 update model. New names, new options: Frontier for early features, Standard as the default, Deferred for organisations that want to land changes more slowly. Microsoft blog here:
They also have some new capabilities and MCP endpoints.
We have a webinar coming up with the Microsoft 365 Change Team, Jim Barber, Brian McGough, and Micky Saini, and MVP Michael Blumenthal, to unpack what's changing and what it means in practice.
Teams Phone user multi-line — now GA
Covered as a roadmap item in the last newsletter, now generally available. Up to 10 phone numbers per user, mixing Operator Connect, Direct Routing and Calling Plan, including across regions where regulation allows.
Real-time voice AI agents in Dynamics 365 and Copilot Studio
GA of real-time voice agents in Copilot Studio, with Dynamics 365 Contact Center now offering agentic capabilities for engagement, quality and operations. Microsoft is pushing hard into the contact centre space — and this also opens up new voice-agent opportunities for ISVs and solution builders.
MTR on Android — SIP interop deep dive
Graham Walsh has a really useful technical overview of how SIP interop will work for Microsoft Teams Rooms on Android, building on the roadmap item I covered in last newsletter. If you're running mixed Windows/Android estates, this is the practical "how" piece. I've also recorded a full breakdown with the team at Pexip; look out for that on Empowering.Cloud soon.