Microsoft shipped 40+ Copilot updates in July 2026, headlined by Copilot Cowork going GA, AI-content watermarking, and Claude becoming a selectable model in Copilot Chat.
By Quantara Editorial Team · AI Tools · Published · 7 min read
Microsoft shipped more than 40 updates to Copilot across Microsoft 365 in July 2026. Most are incremental, but a handful signal real strategic shifts — including one that would have been unthinkable from Microsoft a couple of years ago.
Copilot Cowork Goes Generally Available
The headline update is Copilot Cowork reaching general availability, alongside interface redesigns and better document navigation across the Microsoft 365 suite.
Claude Joins Copilot Chat
Perhaps the most unusual change: Anthropic's Claude is now selectable as a model option inside Copilot Chat, alongside Microsoft's own defaults, for complex analysis, document understanding, and structured content generation. Offering a direct competitor's model inside its flagship product is an unusual move for Microsoft, and it signals confidence that integration and choice matter more than model exclusivity for retaining Copilot users. This follows Microsoft naming GPT-5.6 as Copilot's new preferred model for Word, Excel, PowerPoint, Chat, and Cowork, so Copilot users effectively now have both a default and an alternative frontier model to choose between.
AI Content Watermarking
To improve transparency about AI-generated or AI-altered media, Microsoft 365 now supports watermarking for video and audio content, controlled by an organization-level policy setting that governs whether users can add a visual or audio watermark to AI-generated or altered content.
Pricing and SKU Changes
Starting July 1, 2026, Microsoft 365 Business Standard with Copilot and Microsoft 365 Business Premium with Copilot became permanent SKUs, giving small and medium-sized businesses a predictable, always-on way to adopt Copilot rather than relying on a promotional or provisional offering. The related partner specialization was also renamed to the Microsoft 365 Copilot specialization.
What to Check If You Manage Copilot for a Team
- Confirm whether Claude is enabled as a selectable model for your organization and whether that requires an admin opt-in.
- Review the watermarking policy setting if your organization generates or edits video/audio content with Copilot.
- Check whether your current Copilot SKU maps to the new permanent Business Standard/Premium offerings, especially if you were on a promotional plan.
Sources
- iNews Zoombangla: Microsoft Copilot Rolls Out 40+ July Updates Including Claude Option
- Empowering Cloud: Microsoft 365 AI Workplace Update July 2026
- Microsoft Learn: Release Notes for Microsoft 365 Copilot
Frequently asked questions
- Can I use Claude inside Microsoft Copilot now?
- Yes. As of the July 2026 Copilot updates, Anthropic's Claude is selectable as a model option inside Copilot Chat, alongside Microsoft's own default models, for complex analysis and document-heavy tasks.
- What is Copilot Cowork?
- Copilot Cowork is a Microsoft 365 Copilot feature that reached general availability in the July 2026 update round, part of a broader push toward more autonomous, project-following AI assistance inside Microsoft 365.
- What is AI content watermarking in Microsoft 365?
- It is an organization-level policy setting that lets administrators control whether visual or audio watermarks are added to video and audio content generated or altered with AI inside Microsoft 365.
- Are Microsoft 365 Copilot SKUs changing?
- Yes. Starting July 1, 2026, Microsoft 365 Business Standard with Copilot and Microsoft 365 Business Premium with Copilot became permanent SKUs for small and medium-sized businesses.