Many thanks to Neat, this month's community Benefactor. I really appreciate all their support of the community. Do watch Graham's walkthrough of the new Neat Pulse MCP Server — managing your Neat devices, rooms and sensor data in plain language.

Microsoft's FY26 year-end results landed on Wednesday, revealing over 30 million paid Microsoft 365 Copilot seats, with net seat adds more than doubling quarter over quarter, and average weekly engagement now apparently on par with Outlook and Teams.

Add Nadella making the MAI model strategy explicit, Claude Opus 5 arriving in Copilot, and OpenAI quietly becoming a subprocessor for your Copilot tenant, and it's been a big couple of weeks in Microsoft 365.

Microsoft 365 AI Workplace 15 Minute Update — July 2026

Everything you need to know in 15 minutes or less. Watch on YouTube or read it on Empowering.Cloud.

Microsoft 365 and Copilot News

Microsoft FY26 year-end — 30 million Copilot seats and super app coming this quarter

The FY26 year-end numbers are in (full details, webcast and transcript at that link), and Microsoft came with Copilot stats to share: over 30 million paid Microsoft 365 Copilot seats, with net seat adds more than doubling quarter-over-quarter, conversations per user nearly doubling year-over-year, and average weekly engagement "on par with Outlook and Teams". The number of customers with more than 50,000 seats is up over 7X year-over-year, so the big enterprise deals are clearly landing.

Agent 365 now has nearly 40 million agents registered across tens of thousands of companies, GitHub Copilot has hit 50 million users, and Microsoft highlighted introducing Autopilots — autonomous, long-running agents with full enterprise compliance, including an always-on personal agent "powered by OpenClaw".

We also got confirmation of the Copilot super app: "this quarter we will bring these Copilot experiences together, including Code, in one 'super app' spanning both consumer and commercial experiences."

Nadella's "Frontier Diffusion & Control" — the MAI strategy made explicit

Last issue I covered reports of Microsoft quietly routing Copilot scenarios to its own first-party MAI models. Now Satya has made the strategy explicit in "Frontier Diffusion & Control": In some cases MAI models now match or beat frontier models at lower cost, and they're being routed into GitHub Copilot, Excel, Outlook and more. The same-day companion post on hill-climbing MAI models for GitHub Copilot and Excel goes into how they're benchmarking against the frontier.

Microsoft has co-signed Open Weights and American AI Leadership, an NVIDIA-led open letter — launched by Jensen Huang with his first ever post on X — arguing that open model weights are strategic infrastructure for American AI leadership. Microsoft signed on day one alongside Meta, IBM, Dell, Hugging Face and Mozilla, and the list has grown from 25 signatories at launch to more than 230, with OpenAI and Google joining within a day. The interesting bit is who's still absent: no Anthropic, the only major player not to co-sign.

New MAI models, including Microsoft's first security model

Microsoft announced MAI-Image-2.5-Pro and MAI-Voice-2-Flash, with the cost argument front and centre: up to 84% cheaper in PowerPoint versus GPT-Image-2, and up to 89% cheaper in Dynamics 365 Contact Center.

Staying with MAI: MAI-Cyber-1-Flash is Microsoft's first purpose-built cybersecurity model, arriving alongside Project Perception, an agentic security monitoring effort. A dedicated security model in the MAI family makes sense — security is exactly the kind of high-volume, latency-sensitive scenario where owning the model pays off.

OpenAI is now a subprocessor in Microsoft 365 Copilot — and the toggle was auto-enabled on 24 July

Did you catch this one? OpenAI-operated models, starting with GPT-5.6, now run under OpenAI as a subprocessor in Microsoft 365 Copilot (MC1422074) — and the admin toggle auto-enabled on 24 July unless you had already set it to "No users". There's an EU Data Boundary caveat in there too ("except as otherwise disclosed"), which deserves a careful read if data residency matters to you.

Microsoft and Mistral expand their partnership

Microsoft is putting billions into Mistral compute in Europe, framed squarely around sovereignty and regulated industries. This fits the EU Data Boundary and sovereignty thread we keep coming back to — Microsoft wants a credible European answer for customers who can't or won't send data to US-operated frontier models.

Entra: passkeys by default, and Microsoft SMS/voice MFA is retiring

A big admin planning item: passkeys become the default from 1 September 2026, and Microsoft-provided SMS and voice MFA retires on 1 February 2027 (MC1426371). If you still have telephony-MFA holdouts, they'll need a Security Store provider. Entra is also optimising the passkey registration experience ahead of the switch (MC1440968). Eighteen months sounds like a long time; for a large estate with SMS stragglers, it isn't.

Interesting Microsoft 365 Changes

• Following Claude Sonnet 5 last issue, Anthropic's Claude Opus 5 is now available in Microsoft 365 Copilot.
• A Copilot Cost Management update wiped existing spending alerts, and admins must recreate them (MC1435850). The very dashboard I pointed you at for budgets and alerts last issue had its alert thresholds cleared — if you set alerts up, go and check they're still there.
• Computer Use moves from Researcher (Frontier) into Copilot Cowork (MC1420902) — Cowork keeps absorbing Frontier capabilities, but in a consumption model.
• The M365 Admin agent is GA for all admins (MC1436831) — a pre-installed AI admin experience in the admin center and Copilot Chat.
• Custom skills for PowerPoint Copilot — users can define personal Copilot skills as SKILL.md folders in OneDrive (MC1434580). The agent-skills pattern arriving in Office.
• Copilot mobile can record in-person conversations, on by default (MC1437679) — voice notes with AI transcript and summary. The governance and consent conversation writes itself.
• AI meeting archive files (.meeting), on by default (MC1429018) — auto-generated archives for transcribed meetings in tenant-owned SharePoint Embedded containers.
• Outlook Meeting Insights retires on 15 August, and its replacement, "Prepare for this meeting", needs a Copilot licence (MC1430531) — a free feature retired in favour of a licensed one.
• Notebooks are coming to the M365 Copilot app with OneNote sync (MC1420901).
• Profile card properties become visible by default from 31 August (MC1438571) — eleven properties, including employee number, cost centre, and aliases, go from hidden to shown-when-populated.

OpenAI ChatGPT and Codex merge into one app, ChatGPT Work — their "super app" — and OpenAI's agents pass 10 million users

OpenAI has consolidated ChatGPT Work and its Codex agents into a single app surface — one place for chat, agents and work. This is them trying to get knowledge workers to use Codex/Agents, a similar model to Anthropic Cowork or Copilot Cowork.

Alongside it, OpenAI told Bloomberg its agents have passed 10 million combined active users, up from around 6 million just nine days earlier.

OpenAI also announced Presence, an enterprise platform for deploying voice and chat agents for customer support, outbound sales and internal IT — agents that answer, use company systems, take approved actions and escalate to humans under company-defined policies. OpenAI claims its own Presence-powered support line resolves 75% of inbound issues without a human.

​ChatGPT Voice is now in the desktop app on macOS and Windows — full-duplex voice powered by GPT-Live that can drive Work and Codex agents by voice; and for your AI safety reality check, Simon Willison's write-up of OpenAI's accidental "cyberattack" on Hugging Face — a guardrails-off test model going rogue during a security eval — is well worth a read.

Claude and now xAI push on with Microsoft 365 add-ins

On 21 July Anthropic removed its individual Claude for Excel, Word and PowerPoint AppSource listings, consolidating everything into a single Claude for Microsoft 365 add-in.

Anthropic also shipped write tools for its Microsoft 365 connector on 7 July: Claude can now send email, manage drafts, labels, filters and auto-replies, create, update and delete calendar events, and create or update SharePoint files.

xAI has landed in the Office apps: Grok for Word, Grok for PowerPoint and Grok for Excel are free add-ins, with Grok for Outlook requiring a paid X/SuperGrok subscription — all via an official AppSource listing.

Between Claude, Grok and ChatGPT, everyone wants to be in your Office apps; be sure to check out the compliance implications.

Microsoft Teams and AI-Powered Workplace

Teams voice agents get a certification programme — AudioCodes is first

Microsoft has published the Teams Voice Agent integration (Unify model) docs: third-party voice agent bots can answer calls, authenticate callers, capture intent, then hand off to an auto attendant, call queue, user or contact centre with the caller's context preserved. A Teams Voice Agent Certification Program is "coming soon", and AudioCodes Voca CIC is the first — currently only — listed provider. I understand more are coming.

Facilitator will answer the questions nobody else can

A fresh angle on the Facilitator thread from the last two issues: when a factual question goes unanswered in a meeting, Facilitator (with Copilot Premium) will run a web search and post an answer in the meeting chat (MC1409304), rolling out in August. It's infrequent by design — less than once per meeting — must be manually added to the meeting, and depends on the Copilot web-search setting being enabled. A small step, but it's Facilitator moving from note-taker to active participant.

Key Teams Changes

• Update Teams mobile or lose Calendar — older mobile clients lose the Calendar experience by 31 October (MC1440980). A simple PSA for your users.
• A test mic and speaker button has landed on the pre-join screen (MC1288530) — record a short clip and play it back to check your audio before you join.
• Join-by-code for private teams now needs owner approval (MC1437678) — a small but welcome governance fix.
• Custom recording and transcription consent notifications extend to 1:1 calls from 15 August (MC1426709).
• Stricter controls for federated chats: External Access Restrictions from 31 July, and Mutual Federation from 30 September, both off by default (MC1423114). Note that enforcement can remove users from existing federated chats, so understand the impact before you turn these on.
• A new migration experience in the Teams Rooms Pro Management portal moves shared Teams devices to passwordless Entra resource accounts, rolling out in August (MC1435786). Shared device accounts with passwords have long been a weak point — good to see a proper migration path.

Teams Insider Podcast

• Microsoft Places Updates Explained: Desk Booking, Room Booking and AI, with Martin Boam, Microsoft — YouTube | Audio​
• Dynamics 365 Contact Center Explained, with Alpana Bajaj, Product Lead at Microsoft — YouTube | Audio​
• Why Microsoft Is Quietly Winning with Enterprise AI, with Rishi Kumar, Logitech — YouTube | Audio​

The Teams Insider Podcast is available on Apple Podcasts, Spotify, Amazon Music and YouTube.

Events

We're having an events break for August, but we have some great guests lined up for September.

Online events

• ​Teams Fireside Chat — Kim Matlock, Principal Lead Program Manager, Teams Rooms · 10 September
• ​Microsoft Teams Devices Ask Me Anything · 22 September
• ​M365 Change Community Round Up · 24 September
• ​Copilot Fireside Chat September 2026 · 30 September

In-person events

• ​Ribbon Insights 2026 · 7 September — I'm speaking: Who is going to profit from Agents?
• ​CollabDays Bletchley Park 2026 · 23 September
• ​Microsoft Copilot & Cloud User Group London · 24 September
• ​Microsoft UC User Group London (at Cisco's office) · 30 September
• ​UCX London 2026 · 14 October — we have a private roundtable, let me know if you are interested

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.

Thanks

Tom