ChatGPT vs Microsoft 365 Copilot: which is right for your business?
If your organisation runs on Microsoft 365 and wants AI that works across your own emails, files, meetings and chats with existing permissions, Microsoft 365 Copilot is the better fit. If you want a flexible standalone assistant for writing, analysis, images and research, or you are not a Microsoft shop, ChatGPT is usually stronger and quicker to adopt. Copilot keeps data within the Microsoft 365 service boundary, which simplifies governance for Australian tenants. Many organisations use the free Copilot Chat for general work and license full Copilot only for heavy users.
Last reviewed October 2026
Side-by-side comparison
| ChatGPT | Microsoft 365 Copilot | |
|---|---|---|
| Best at | General-purpose assistance: drafting, data analysis, image generation, research and custom GPTs. | Working across your Microsoft 365 data: summarising Outlook threads, Teams meetings and SharePoint files in context. |
| Plan structure | Free, Go, Plus and Pro for individuals; Business and Enterprise for organisations. | Copilot Chat included with Microsoft 365 business plans; Microsoft 365 Copilot is a per-user add-on licence. |
| Access to your data | Reads files you upload and connected sources such as SharePoint or Google Drive when enabled. | Grounded in Microsoft Graph, so it uses emails, files, chats and calendars each user already has permission to see. |
| Team and admin controls | Separate workspace admin, SSO and connector controls. | Managed through the Microsoft 365 admin centre with Purview, sensitivity labels and existing compliance tools. |
| Training defaults | Business, Enterprise and API data excluded from training by default. | Prompts, responses and Graph data are not used to train foundation models. |
| Data residency | Enterprise, Edu and API customers can store data at rest in Australia; processing may occur offshore. | Data at rest follows your Australian tenant; Microsoft has committed to in-country Copilot processing for Australia. |
| Office app integration | Works alongside Office apps through connectors and file uploads rather than inside them. | Built into Word, Excel, PowerPoint, Outlook and Teams. |
| Underlying models | OpenAI's GPT models. | OpenAI GPT models, with Anthropic Claude models available for some features. |
| Custom agents | Custom GPTs and agent mode for multi-step tasks. | Agents built in Copilot Studio that connect to business systems. |
Choose ChatGPT if…
- →Your organisation does not run on Microsoft 365
- →Staff need image generation and voice as well as writing help
- →You want custom GPTs that non-technical staff can build quickly
- →Only a few people need AI and a full Copilot licence for each is hard to justify
Choose Microsoft 365 Copilot if…
- →Staff spend their day in Outlook, Teams, Word and Excel and want AI inside those apps
- →You need answers grounded in your own emails, meetings and SharePoint files
- →Your compliance team wants AI governed through Purview and existing sensitivity labels
- →You want Copilot interactions processed in Australia once in-country processing is in place
For Australian businesses
For Australian Microsoft 365 tenants, Copilot data stays within the Microsoft 365 service boundary and your existing data processing terms, which suits government and regulated organisations. Microsoft has committed to in-country processing of Copilot interactions in Australia, with its timeline revised to the end of 2026, so check the current status for your tenant. Before rollout, fix SharePoint and Teams permissions, because Copilot surfaces anything a user can technically access. ChatGPT needs its own Privacy Act 1988 assessment and data processing agreement, and is billed in US dollars.
Our verdict
For organisations already on Microsoft 365, start with the free Copilot Chat, then license Microsoft 365 Copilot for roles that live in email, meetings and documents, where its access to your own data delivers real value. ChatGPT is the better buy for non-Microsoft businesses, for creative and research-heavy roles, and for small teams who want broad capability without a per-seat add-on. Copilot's governance and Australian data handling make it the easier approval for regulated sectors; ChatGPT is usually more capable as a standalone assistant.
Full reviews
ChatGPT (OpenAI)
Free plan + paidGeneral Assistant
OpenAI's general-purpose AI assistant. It handles writing, coding, file and image analysis, data analysis and web research through a chat interface, with an API for building it into your own systems.
Best for: Small and mid-sized teams wanting one general assistant for everyday writing and analysis
ChatGPT review →General Assistant
Microsoft's AI assistant for work, built into Word, Excel, PowerPoint, Outlook and Teams and available through the Copilot app. It drafts, summarises and analyses using the emails, files, chats and meetings each user can already access, and includes agents such as Researcher and Analyst for deeper tasks. Microsoft now brands the app simply as Microsoft Copilot.
Best for: Organisations already standardised on Microsoft 365 Business or Enterprise plans
Microsoft 365 Copilot review →
Frequently asked questions
Is Microsoft 365 Copilot the same as ChatGPT?
No. Copilot uses OpenAI's GPT models and, for some features, Anthropic's Claude models, but it is a separate Microsoft product. Its main difference is that it works across your organisation's emails, files, chats and meetings through Microsoft Graph and runs inside Word, Excel, Outlook and Teams under your Microsoft 365 governance.
Does Microsoft 365 Copilot process data in Australia?
Data at rest follows your Microsoft 365 tenant location, which is Australia for most local organisations. Microsoft has committed to processing Copilot interactions within Australia, with the timeline set for the end of 2026. Check the Microsoft 365 admin centre or your Microsoft partner for the current status in your tenant.
What should we fix before turning on Copilot?
Review permissions in SharePoint, OneDrive and Teams. Copilot shows users any content they can technically access, so overshared folders become visible through simple questions. Apply sensitivity labels to confidential material, remove broad sharing links and run a pilot with a small group before a wider rollout.
Can an organisation use both ChatGPT and Copilot?
Yes, and many organisations do. A common approach is Copilot Chat for all staff, full Microsoft 365 Copilot for roles that work heavily in email and meetings, and ChatGPT Business for a smaller group that needs image generation, custom GPTs or deeper research. Keep one usage policy covering both.
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Still deciding?
AI Lab Australia can trial both tools against your own documents and workflows, and set up the one that fits with the right privacy controls.