Microsoft bundles Copilot AI into one app, usage-based pricing

Microsoft has been pushing to gain momentum in enterprise AI, where rivals like Anthropic have been gaining traction. The company's flagship work AI product, Copilot, has not taken off despite Microsoft's dominant position in business software through Office. Fewer than 7% of the over 450 million commercial Office 365 seats have licenses for the AI addition. Previously, Microsoft offered its 365 Copilot assistant for knowledge work separately from its GitHub Copilot coding agent. The market has been consolidating around easy-to-use products from OpenAI and Anthropic that bundle various functions. This launch follows CEO Satya Nadella's talk in June about a future Copilot 'super app.' The new app aims to cater to user demands by allowing manual model selection and usage-based pricing. Microsoft's executive vice president for Copilot, Jacob Andreou, emphasized a high bar for the product, prioritizing user value over cost efficiency. A customer, David McLaren of GHD, expressed excitement because the app simplifies GitHub-like capability for more people. Microsoft faces a crowded AI agent market, with Meta's Muse app recently topping Apple's App Store. Andreou acknowledged that adding coding to the app is Microsoft playing catch-up. The company still relies on models from OpenAI and Anthropic even as it invests in its own. The success of this new app hinges on whether it can drive adoption among the vast base of Office 365 customers who have yet to pay for AI tools, and whether usage-based pricing proves more attractive than subscriptions. For Microsoft, which is underperforming the Nasdaq this year, this is a critical test of its ability to compete in the rapidly evolving enterprise AI landscape.