Microsoft Cowork: One data store for all your M365 assets

Microsoft has unveiled the next iteration of its Copilot artificial intelligence (AI) tools, which includes a tie-up with Anthropic, a company that recently took a stand against the US government’s military use of AI.

The new Copilot is called Cowork, and the combination of Anthropic’s agentic model for multi-step tasks with Microsoft 365 means, according to Microsoft, that it delivers a managed, enterprise‑grade experience. The AI functionality is bundled into a new tier of Microsoft 365, called E7, which costs $99 per user.

The fact that the functionality is included in a new subscription bundle may curb the adoption of Cowork. Analyst Constellation Research noted that the upgrade path for Microsoft 365 E7 will take time since E5 is a dominant plan that customers likely have under contract. As E5 plans expire, Constellation Research said Microsoft customers would have E7 as an option and likely have more experience with AI agents.

The Microsoft vision with Cowork, which CEO Satya Nadella talked about during his keynote presentation at the company’s AI Tour London event, is an enterprise data store, which Microsoft’s tools can access. The company calls this Work IQ, a context engine Microsoft introduced during its Ignite 2025 developer’s conference.

During the London keynote, Nadella discussed how information stored in the various Microsoft products that comprise Microsoft 365 provide a data store for AI. “This is massive information, and to have what is essentially a stateful system with AI reasoning that can then translate all of that information into what we describe as Work IQ can bootstrap any agent you build,” he said.

In a blog post, Microsoft said the foundation of Work IQ is its secure access to and understanding of both structured and unstructured data from Microsoft 365, Dynamics 365, Power Apps and other connected business systems that represent work happening across the organisation.

Microsoft said customers can ingest business data from other systems and line-of-business applications into their tenant using Copilot Connectors, enabling Copilot to reason over data that may reside in non-Microsoft systems. It said “hundreds of pre-built connectors” are available. WorkDay and Adobe have provided integration into this new Microsoft 365 ecosystem. There is also the Work IQ application programming interface (API), which exposes Copilot intelligence through a standard RESTful interface to enable developers to use Copilot chat in their own applications.

During the company’s second-quarter earnings call on 28 January, Nadella was asked about whether customers would buy into Microsoft’s Work IQ vision. “The most important database for any company that uses Microsoft today is the data underneath Microsoft 365,” he said. “The reason is because it has all this tacit information. Who are your people? What are the relationships? What are the projects they’re working on? What are their artefacts, their communications? That’s a super important asset for any business process, business workflow context.”

Within Work IQ and the Cowork ecosystem, a customer’s Microsoft 365 tenant data provides Copilot with a foundational understanding of individual and collective work.

Charles Lamanna, president of business applications and agents at Microsoft, wrote in a blog post: “When you hand off a task to Cowork, it turns your request into a plan. The plan continues in the background, with clear checkpoints so you can confirm progress, make changes, or pause execution at any time. Cowork checks in if it needs clarification. You can see any actions that it is recommending, then approve changes before they are applied. Copilot works independently without you giving up control.”

While some industry watchers have been critical of the company’s security stance as it relates to data sovereignty, Microsoft said the permission-based, information-protected content is stored in SharePoint and OneDrive, including Word, Excel, PowerPoint and other file types, as well as Outlook emails, and Teams meetings and chats. The data contained in a customer’s Microsoft 365 tenant also includes rich metadata and signals that, according to Microsoft, describe patterns of action, activity, collaboration, and communication between users and groups over time.

Discussing Microsoft’s alliance with Anthropic and how this supports agentic AI workflows, Forrester vice-president and principal analyst JP Gownder said: “Microsoft’s launch of Copilot Cowork signals a strategic shift in its AI approach, showing the company moving Copilot away from reliance on OpenAI alone and toward a multi-model architecture that includes partners such as Anthropic. The move also highlights the current limitations of Microsoft’s existing Copilot agents: while the company has talked extensively about autonomous ‘agents’, they have so far struggled to take meaningful action compared with newer agentic systems such as Anthropic’s.

“At the same time, Copilot Cowork clearly taps into the growing hype around Anthropic’s Claude Cowork concept, but significantly extends it by embedding the capability across Microsoft 365 applications rather than keeping it as a desktop-centric tool,” he said. “By connecting the experience to Microsoft’s WorkIQ context layer, the company is positioning Copilot to understand a user’s work, documents and workflows across the enterprise, which could make these agents far more useful inside day-to-day productivity tools.”