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Tom Arbuthnot's Microsoft 365 Perspective |
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Many thanks to Neat, this month's community Benefactor. I really appreciate all their support of the community. Neat has a new MDEP 10-inch Pad Pro — more details in this ISE interview.
Microsoft 365 and AI Workplace February Update
You can check out my February update video briefing to get all the news in under 15 minutes on YouTube, LinkedIn and on the podcast.
The Big Picture from the Microsoft AI Tour: Microsoft IQ
I was fortunate to go to the Microsoft AI Tour in London this week. Here are my notes from Satya's keynote.
Microsoft IQ was the main point for how Microsoft can differentiate in AI:
- Work IQ — this draws on all your Microsoft 365 data: emails, files, chats, meetings, calendar. The "stateful system" of your organisation's work.
- Fabric IQ — brings in semantic models from your data estate, pulling structure from Excel, Power BI, and data lakes in Fabric.
- Foundry IQ — the "enterprise data planner". This is the layer that helps organisations catalogue and connect their broader data sources for AI agents.
The pitch is that Microsoft 365 isn't just a productivity suite — it's the "bootstrap" layer for enterprise AI. Your emails, documents, and meetings become the context that gives Copilot and agents power. No one else has that depth of organisational data already flowing through Microsoft 365, and that's the moat Microsoft is betting on.
Enterprise AI: The Competition is heating up
In February, Anthropic made a significant push with Claude Cowork, expanding beyond its original knowledge-work positioning:
- 10+ new job-function plugins covering financial analysis, investment banking, equity research, private equity, wealth management, HR, design, engineering, operations, and brand voice.
- 13 new MCP connectors including, Google Workspace (Drive, Calendar, Gmail), DocuSign, Slack, FactSet, MSCI, Harvey, Apollo, Clay, Outreach, SimilarWeb, LegalZoom, and WordPress.
- Excel and PowerPoint integration — so Claude can carry context in apps - and control apps - really taking the fight to Copilot.
- Open-sourced 11 plugins on GitHub, plus private plugin marketplaces for enterprises to build their own.
That's a very deliberate land-and-expand strategy. Start with knowledge workers, then fan out into business functions with deep, domain-specific tooling.
The day before, OpenAI announced Frontier Alliances — multi-year partnerships with McKinsey, BCG, Accenture, and Capgemini:
- BCG and McKinsey are positioned as strategy and operating model partners.
- Accenture and Capgemini handle end-to-end systems integration.
- OpenAI is embedding "Forward Deployed Engineers" alongside consultants at client sites.
- The Frontier platform is pitched as a "semantic layer for enterprise" — essentially a middleware play.
This is OpenAI going enterprise through the consulting channel rather than direct. They also used the word Frontier that Microsoft has been building their enterprise story around, that can't be a coincidence.
Microsoft put up its own comparison page, positioning Copilot against ChatGPT Enterprise. Microsoft's advantage remains the depth of integration with M365 and the existing licensing relationships. But Anthropic's rapid connector expansion and OpenAI's consulting alliances show neither competitor is standing still. It is a very competitive race.
Sovereign Cloud Expansion
Microsoft announced an expansion of its sovereign cloud capabilities on February 24th.
The key announcements:
- Azure Local disconnected operations (now available) — mission-critical infrastructure running with Azure governance but zero cloud connectivity. Fully air-gapped.
- Microsoft 365 Local disconnected (now available) — Exchange, SharePoint, and Skype for Business running entirely within a sovereign boundary. Yes, SfB lives on.
- Foundry Local — large multimodal AI models running in fully disconnected environments, built on NVIDIA infrastructure. This is the big one — sovereign AI processing without any data leaving the boundary.
- In-country Copilot processing expanding to 15 countries. Four by end of 2025, with 11 more rolling out through 2026, including Germany, Canada, UAE, and the US.
See the full announcements on the Official Microsoft Blog.
DLP Policy Bug Exposes Confidential Email in Copilot
There's been a DLP policy bug where Copilot Chat was surfacing email content it shouldn't have been. Microsoft confirmed in service health advisory CW1226324 (3 February 2026) that a "code issue" was allowing items in Sent Items and Drafts folders to be picked up by Copilot, even with confidential labels applied. Tony Redmond has a good write-up here.
Microsoft 365 / Teams Change Items
- Direct Routing change — MC1213773 — SBCs need updating to trust new Microsoft root certificate chains before March 2026 enforcement.
- Teams Phone hardware upgrade — MC1051094 — Legacy Teams phones using old auth infrastructure will stop working June 1, 2026. Replace affected phone devices before then.
- Defender for Office 365: URL click alerting extends to Teams — MC1239187 — MDO malicious URL click alerts now cover Teams chats, channels, and meetings — not just email. Good to see security protections extending into Teams chat.
- M365 Copilot app: branded footer customisation — MC1238432 — Admins can show a branded "Approved by [Logo]" footer in Copilot Chat to confirm it's a trusted work environment. Not sure I get this one, but maybe useful for adoption?
- xAI Grok 4.1 Fast in Copilot Studio (US only, admin opt-in) — MC1235017 — xAI's fast-reasoning model joins OpenAI and Anthropic in Copilot Studio's multi-model lineup. Again, Europe/rest of world is left waiting.
- Transition Teams Android device management (TAC → Teams Rooms Pro portal) — MC1227622 — Android device management moving from TAC to the Pro Management portal between April–September 2026. No action needed yet.
- Teams User Configuration API now in v1.0 — MC1169072 — Graph APIs for Teams admin (user config, number management, policy assignment) graduated from beta to v1.0 for production use.
- Teams UI Changes -App names hidden in app bar — MC1226220 — Teams app bar will show icons only, hiding text label and Simplified Teams app bar — MC1234559. Rolling out mid-March.
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Events
Online events:
In-Person events:
More on our events page.
As always, if you have any questions, corrections, thoughts, or feedback, please reply.
I read all the replies. I really do want to hear your thoughts.
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