Back to Blog
Microsoft 365

Microsoft 365 Copilot: The Most Important AI Updates in January 2026

January 13, 2026
9 min read

1. More Context: Copilot Understands Your Work Better

In January 2026 Microsoft mainly extends Copilot behind the scenes: the AI understands relationships between your documents, chats and meetings more precisely.

1.1 Word, Excel and PowerPoint with Project Awareness

Copilot can now:

  • Detect document series – e.g. proposals, contracts, minutes for the same customer.
  • Compare versions – requests like "use the numbers from the last shared version" work more reliably.
  • Build presentations from multiple sources – it combines content from Word, Excel and existing decks consistently.

Everyday example:

> "Create a 5‑slide executive presentation based on the last quarterly report and the 2026 budget plan. Focus on risks and open decisions."

Previously Copilot often focused on a single document. Now it automatically pulls in other relevant files – as long as you have permission.

1.2 Outlook and Teams: Tasks Instead of Just Text

Copilot detects tasks in emails and chats much more reliably.

New options:

  • Task list from a chat: "Show me all tasks from this chat, sorted by owner."
  • Plan follow-ups: "Create reminders for next Tuesday morning for all open commitments in this thread."
  • Extract meeting decisions: After a Teams meeting: "List all decisions, owners and deadlines from this meeting."

Copilot moves from text generator to assistant that structures work packages.

---

2. New Capabilities in the Core Apps

2.1 Word: Drafting and Review in One Flow

With the January update Copilot in Word deals better with audiences and tone:

  • Adjust style: "Make this more concise and neutral" or "Explain this for a non-expert audience".
  • Check the red thread: Copilot highlights sections that don’t fit the target audience or key message.
  • Policy checks (if enabled): Warnings when templates contain sensitive terms or personal data.

This saves time both for first drafts and for quality checks.

2.2 Excel: Scenarios Instead of Formula Hunting

Microsoft positions Copilot in Excel even more clearly as a scenario engine.

Useful prompts:

  • "Show me how profit changes if material costs increase by 8% and revenue stays flat."
  • "Create three scenarios (optimistic, realistic, pessimistic) for 2026 and summarize them in an overview chart."

Technically Copilot still builds formulas, pivots and charts – but you don’t have to know the details.

2.3 PowerPoint: Decks Directly from Meetings

Copilot can now automatically generate a presentation from a Teams meeting:

  • Prompt: "Create a presentation with max 10 slides from today’s project meeting. Focus on decisions, risks, next steps."
  • Data basis: transcript, chat, shared files, whiteboard notes.

Ideal for status updates, decision templates and management reviews.

2.4 Outlook: Replies with the Right Tone

Copilot controls tone and length of replies more precisely:

  • "Short, neutral response including a budget question."
  • "Polite, clear rejection with alternative date suggestions in March."

Additionally:

  • Thread summaries for long conversations with many participants.
  • Risk hints (if enabled), e.g. "This mail may contain personal data. Do you want to anonymize it before sending?"

2.5 Teams: More Precise Meeting Recaps

Copilot recaps in Teams become more structured and role-aware:

  • Structure by agenda, decisions, open points, owners.
  • Role filter: "Show me the points that matter to me as project lead."
  • Better detection of commitments: "I’ll take care of that" is linked to a person, topic and due date.

---

3. Security and Compliance in Focus

Many organizations were cautious because of security concerns. In January 2026 Microsoft therefore adds governance and transparency features.

3.1 Granular Control of Data Sources

Admins can define more precisely:

  • In which areas Copilot may be used at all (e.g. only specific teams, locations or departments).
  • Which data sources Copilot may access (SharePoint libraries, Teams channels, specific mailboxes).
  • Whether Copilot may quote from sensitive areas or only provide summaries.

Important: Copilot still respects all permissions. No read access means no content – including via Copilot.

3.2 Data Storage, Logs and Transparency

New extended options for Copilot data:

  • Retention periods for Copilot chats.
  • Audit logs for security-relevant actions.
  • Source transparency for users: Copilot shows from which files and locations information is taken.

SMBs can usually stay with standard profiles. Large enterprises get the detail level their compliance teams expect.

---

4. Administration and Licensing: Less Complexity

4.1 Simplified Copilot Licensing

In January 2026 Microsoft reduces the variety of Copilot SKUs:

  • Clearer bundles such as Copilot for Microsoft 365, Copilot for Frontline, Copilot for Developers.
  • Better admin center views showing who has Copilot licenses and where they use it.

This simplifies pilots and staged rollouts.

4.2 Predefined Policy Profiles

New standard policy profiles, for example:

  • Conservative – heavily restricted data sources, no external sharing.
  • Balanced – sensible default for most organizations.
  • Innovative – broad use with clear guardrails, ideal for pilot groups.

Admins can start with a profile and fine-tune later instead of configuring everything from scratch.

---

5. Practical Use Cases for January 2026

5.1 Leadership and Management

  • Weekly decision reports from project updates in Teams.
  • Condensed summaries of long email threads as decision input.
  • Board-ready presentations built from existing material.

5.2 Project Management

  • Automatic task lists from meetings and project chats.
  • Risk and status reports in Word based on Excel figures and Teams minutes.
  • Queries like: "Show me all open points from the last three project meetings."

5.3 Everyday Knowledge Work

  • Faster email replies in the right tone.
  • First drafts for concepts, minutes, instructions.
  • Explanations of complex documents: "Explain this document in 5 sentences for a non-expert."

---

6. How to Start Pragmatically

Steps for a practical adoption of the January updates:

1.Start small – one pilot group with clearly defined use cases.
2.Define simple rules for AI use and handling of sensitive data.
3.Pick a standard policy (e.g. "balanced") and only adapt where really needed.
4.Evaluate after 4–6 weeks: where does Copilot save real time, where are risks or misunderstandings?
5.Roll out gradually, supported by short, practical trainings.

---

7. Conclusion: Copilot Becomes a Serious Work Tool

The AI improvements in January 2026 make Microsoft 365 Copilot more mature:

  • More context, less guesswork.
  • More security and governance options.
  • Less licensing and rollout complexity.

For organizations that only experimented with Copilot so far, it’s worth another look – not because of one flashy feature, but because Copilot now fits everyday teamwork and project work much better.