‘Microsoft recommends that admins inform their help desk staff and review license request settings,’ the vendor said in the online post.
Microsoft has started limiting some Copilot features for users without Microsoft 365 Copilot licenses, with today marking the start of these limits for larger organizations.
Microsoft started applying the limits to organizations with 2,000 or fewer Microsoft 365 seats on Nov. 2, according to an online post by the Redmond, Wash.-based technology giant.
Microsoft calls these “fair use” limits for Copilot Chat features and capabilities, although this isn’t fair use in the sense of copyright law. Chat will still be included in M365 subscriptions, and solution providers do not have to take any administrative action as part of the change.
However, Microsoft is the one setting and managing limits, with administrators unable to view or adjust them. Microsoft doesn’t publish specific thresholds because they can vary throughout the day and may change as the Copilot AI assistant product evolves, according to Microsoft.
“Microsoft recommends that admins inform their help desk staff and review license request settings,” the vendor said in the online post.
[RELATED: Microsoft Delays Default Copilot Usage-Based Billing Again, Citing Partner Feedback]
CRN has reached out to Microsoft for comment.
The change also comes amid other policy changes Microsoft is implementing as AI pricing and economics evolve. Microsoft has also told solution providers to expect usage-based billing (UBB) on by default for new Microsoft 365 Copilot Business subscriptions purchased through Cloud Solution Provider partners sometime between January and March 2027, Microsoft’s third fiscal quarter.
Dawn Sizer, CEO and co-founder of Mechanicsburg, Pa.-based Microsoft solution provider 3rd Element Consulting—a 2026 MSP 500 honoree—told CRN in an interview that she would like visibility on users approaching the usage limit for transparency and so users can better plan for days when they’ll engage in more intensive Copilot use.
“It would make the client conversations easy as it gives them a reasonable opportunity to understand and control the spend on usage,” Sizer said.
Microsoft Copilot Chat Limits: What Partners Need To Know
Users reaching Copilot Chat limits might receive a message about Microsoft 365 Copilot, Microsoft 365 Copilot Business for small and medium businesses and other Copilot capabilities they can upgrade to, according to the vendor’s online post. Solution providers can use that signal and other customer insights to start a conversation with client users on upgrading.
“Users who reach limits are showing real demand for Copilot, which makes them strong candidates for Microsoft 365 Copilot, including Microsoft 365 Copilot Business for small and midsize businesses,” according to a Microsoft frequently asked questions (FAQ) document on Copilot. Microsoft recommends solution providers explore “Copilot in 30” trial offers for eligible users.
However, Microsoft 365 Copilot licenses also include fair use limits, according to Microsoft. Copilot’s user subscription license (USL) covers everyday AI tasks. “We’re setting usage limits so that the vast majority of people never reach a limit,” Microsoft Corporate Vice President Nicole Herskowitz said in an online post in September.
It’s possible Copilot Chat users are already used to “fair use” limits, which have already been in place for image generation and other features, according to Microsoft.
The in-product user message will also tell users when the limited features will become available again. Copilot Chat responses already in progress aren’t interrupted when a limit is hit, according to the vendor.
The limit notification in most organizations will include an option to upgrade. Users can click that option to request an M365 Copilot license from administrators. Admins can then approve or deny requests through the M365 admin center.
Organizations have the option to allow users to buy licenses directly through that limit-reached notification. Administrators can turn off direct purchases for each product.
These limits should be hitting users without M365 Copilot licenses in commercial tenants who use Copilot Chat on the web, desktops and through mobile applications, according to Microsoft.
Microsoft’s AI Business Solutions & Security Partner Experience also shows solution providers which clients have users reaching Copilot usage limits. ASPX shares that and other signals to show solution providers which users might want to upgrade their licenses. Resellers with Partner Center access can look at ASPX or contact their distributor for more information, according to Microsoft.
Microsoft executives have been publicly saying that the future of AI pricing is a basic allotment of compute under a license with metered consumption charges for more advanced uses of AI.
During Microsoft’s latest quarterly earnings call, CEO Satya Nadella touted the vendor’s growing consumption-based AI business, revealing that the number of Copilot customers actively consuming credits through usage-based billing grew more than 75 percent over the quarter.
Credit consumption from agentic features on Microsoft’s GitHub business, which already uses usage-based billing, has more than doubled. Consumption plus seat subscriptions increase Microsoft’s total addressable market and average revenue per user, Nadella said on the call.
“As agents take on higher-value work, consumption opens up business-funded demand, with spending tied directly to the value these agents deliver,” Nadella said.
Nadella does not want customers “token-maxxing”—maximizing the consumption of AI input and output tokens at the cost of performance—and he feels “very good about the progress” in educating customers.
“We’re trying to make sure that customers understand both options [and] they’re able to use the two options in the optimal way that benefits them,” the CEO said. “We don’t want them to overbuy one thing and then feel like they’re ‘token-maxxing’ because that doesn’t serve anybody’s purpose. We want to make sure that they understand the value of the subscription and how it’s a continually improving value. It’s not even static. And at the same time, you can exercise this consumption meter.”
Copilot Chat Vs. Microsoft 365 Copilot: What’s The Difference?
All Microsoft business users have access to Copilot Chat. Without a paid Microsoft 365 Copilot license, users still receive AI model access, web-grounded reasoning, limited work-data reasoning through Work IQ, limited agent access and enterprise-grade security, according to Microsoft.
Adding a Microsoft Copilot license gives users priority AI model access and full Work IQ data reasoning, leveraging meetings, emails, chats, files and more.
Other licensed capabilities include extensive access to Researcher, Analyst, custom agents and other advanced AI agents plus included Copilot Studio access, according to Microsoft.
Accounts with the label M365 Copilot (Premium) have Copilot add-on licenses. Copilot Chat (Basic) and M365 Copilot (Basic) labels mean the account doesn’t have an add-on license.
