Copilot Business vs Microsoft 365 Copilot: technical differences

This article is intended for IT administrators and engineers who want to understand the technical differences between Microsoft 365 Copilot Business and Microsoft 365 Copilot (Enterprise).

First, let's clear up the confusion: two Copilot products

Microsoft offers two Copilot products with confusing naming:

Important difference: Copilot Business is an add-on license that only works on top of an existing Business license. Microsoft 365 Copilot can be purchased standalone or as an add-on with Enterprise licenses.

The crucial conclusion

Microsoft Learn confirms in the Copilot Business FAQ:

"The Copilot Business add-on delivers the same capabilities as the Microsoft 365 Copilot offering."

For Business Premium customers this means:

• Copilot Business and Microsoft 365 Copilot offer identical AI functionality
• The Semantic Index works exactly the same
• Microsoft Graph integration is completely equal
• The only difference is the price (~$9/user/month)

When to choose which Copilot?

For IT administrators

Key point: The Copilot functionality is technically identical. The differences lie in the governance and compliance tooling of the underlying M365 license.

Semantic Index: how it works technically

The Semantic Index is the core of Copilot's ability to find relevant business data. Microsoft automatically generates this index for every user with a paid Copilot license.

Vector-based indexing

• Vectors: are numerical representations of words, sentences, and documents
• Clustering: groups semantically related data in multi-dimensional spaces
• Similarity search: finds relevant content without exact keyword matches

Index levels

Supported file types

Word (.doc/.docx), PowerPoint (.pptx), PDF, OneNote (.one), Web pages (.aspx) - all up to 512 MB.

Not supported: Delegated mailboxes, shared mailboxes, archived data.

Microsoft Graph integration

Both Copilot Business and M365 Copilot Enterprise have full access to Microsoft Graph within the user context:

• Outlook emails and calendar
• Teams chats and meetings
• SharePoint and OneDrive documents
• Contacts and tasks

Both license levels support Graph Connectors with 50 million items index quota.

Grounding per application

Governance: this is where the real differences are

The Copilot engine is identical, but the control over what Copilot can access differs per underlying M365 license.

SharePoint Advanced Management (SAM)

Included with every Copilot license since early 2025:

• Site Ownership Policy
• Site Lifecycle Management
• Data Access Governance Reports
• Restricted Access Control (RAC)
• Restricted Content Discoverability (RCD)
• Change History Reports

Microsoft Purview integration: E5 vs E3 vs Business Premium

Conclusion

The add-on doesn't matter, the underlying license does

The technical Copilot engine is completely identical for Copilot Business and Microsoft 365 Copilot. For Business Premium customers with fewer than 300 users, there is no technical reason to choose the more expensive Microsoft 365 Copilot add-on.

Summary per scenario

The essential decision is not which Copilot add-on you buy, but which M365 license you need for your governance and compliance requirements.