Reasoning Models in Microsoft Copilot: Who’s Doing the Thinking?

In addition to AmeliaHernandez​  wonderful article "Copilot Chat vsus. Microsoft 365 Copilot What's the difference?".

Microsoft Copilot is not a single product – it’s a modular ecosystem powered by a range of different language models (LLMs), depending on where, how, and with which license you're using it.

In this post, we’ll walk through which reasoning models are used in Copilot, what they’re best suited for, and why it matters for IT pros, administrators, and business users alike.

🧠 What Is a “Reasoning Model”?

Unlike standard text generators, reasoning models are designed to:

• Combine information from multiple sources
• Apply logical steps and draw conclusions
• Respond with contextual awareness
• Handle structured and unstructured tasks effectively

The model chosen by Microsoft impacts:

• Quality and depth of the output
• Speed and resource efficiency
• Ability to analyze or automate tasks
• Data access and compliance safeguards

🚦 Current Model Usage in Microsoft Copilot

🧑‍💻 Copilot Chat (for individual, business & enterprise users – without Copilot for M365 add-on)

➡️ Model: OpenAI o1

Used in:

• The free Copilot version at https://copilot.microsoft.com
• Microsoft 365 Business & Enterprise plans (Standard use without Copilot add-on)
• Edge and Bing  integration 
• Also powers the “Think Deeper” feature in Copilot Chat

This model offers solid everyday performance and decent contextual understanding but is limited in reasoning depth and enterprise grounding.

💼 Microsoft 365 Copilot

➡️ Model: OpenAI o4

Available in Word, Excel, Outlook, Teams, PowerPoint, and more.

• Leverages Microsoft Graph grounding to access user and org data
• Provides significantly deeper reasoning and structured task handling
• Ideal for knowledge work, document creation, planning, and more
• This is Microsoft’s most advanced reasoning model in production

🧪 Copilot Agents

e.g., Analyst, Research, Planning tools

➡️ Model: OpenAI o3-mini

New agent-based Copilot features use this lightweight model:

• Optimized for structured, data-driven tasks
• Supports recurring analysis and planning workflows
• Can access Graph and recent content, but with focused scope

🔐 Security Copilot (Microsoft Defender etc.)

➡️ Model stack includes:

• OpenAI GPT-4
• Phi-3 (optimized for factual accuracy and speed)
• Microsoft’s internal Threat Intelligence
• RAG (Retrieval-Augmented Generation) for contextual enrichment

Security Copilot is tailored for security analysts and SOC teams to provide actionable insights, natural language summarization, and risk reasoning.

⚙️ Copilot Studio & Power Platform Copilot

➡️ Uses a combination of:

• Azure AI Services
• OpenAI models o1–o4, depending on use case
• Custom GPTs (via Copilot Studio)
• Logical reasoning layers and connectors to Dataverse & business apps

These solutions are ideal for custom workflows, low-code automation, and industry-specific copilots built by organizations themselves.

📌 Why This Matters

🔍 Microsoft doesn’t use a one-size-fits-all model – it uses the right model for the job.
🧩 The model you get depends on your license, use case, and environment.
🛡 Copilot for M365 (o4) provides strongest contextual reasoning, while lighter models like o1 and o3-mini power more general or task-specific use.

Knowing what’s under the hood helps you:

• Set realistic expectations for your users and leadership
• Understand licensing impact on capabilities
• Optimize prompts and workflows for better output
• Stay compliant by knowing when and how data is accessed

💡 Pro Tip:

If you're only using Copilot Chat (o1) via Edge or M365 Business Standard, you might notice less nuanced responses.
To unlock full enterprise value, Copilot for Microsoft 365 (with o4) is the model to aim for – especially when working across Teams, SharePoint, Outlook, and OneDrive with secure, compliant data access.

📣 Do you have real-world experiences or feedback with these models? Let’s connect in the comments!