21 Jan How Microsoft 365 Copilot Works: The Technology Behind Your AI-Powered Assistant

How Microsoft 365 Copilot Works: The Technology Behind Your AI-Powered Assistant

In our previous blog post, we introduced the fundamentals of Microsoft 365 Copilot, an AI-powered assistant designed to enhance your productivity and creativity by seamlessly integrating Large Language Models (LLMs), Microsoft Graph data, and Microsoft 365 applications. If you’re new to Copilot, you can read about its basics here: What is Microsoft 365 Copilot?.

In this blog, we’re diving into the mechanics of Microsoft 365 Copilot. How does it work? How does it understand your needs and provide tailored assistance while ensuring security and compliance? Let’s unpack the magic behind this revolutionary tool.

At the Core of Microsoft 365 Copilot

Microsoft 365 Copilot isn’t just a feature—it’s your intelligent partner designed to accompany you in day-to-day tasks across apps like Outlook, Word, Excel, PowerPoint, and Teams. It saves time, improves collaboration, and transforms the way you work by offering relevant suggestions and creating new content. Here’s how:

1. Understanding You and Your Work Context
   Copilot’s effectiveness comes from its ability to deeply understand your needs by:
   • Analyzing Content: It examines the document you’re drafting, email you’re writing, or meeting you’re attending to understand the subject matter, tone, and intent.
   • Accessing Microsoft Graph Data: It pulls context from your calendar, emails, chats, and documents to craft personalized responses that match your current activity.
2. Taking Action: Once Copilot understands your context, it takes meaningful actions:
   • Search and Retrieval: It identifies and fetches relevant data or content to help you complete your task.
   • Natural Language Recommendations: Using LLMs, Copilot generates naturally phrased and contextually accurate suggestions.
   • Refining Outputs: It evaluates potential responses and ensures they align with your needs.

Key Features of Microsoft 365 Copilot

Here’s how Copilot transforms everyday tasks into opportunities for growth and innovation:

1. Enhanced Meeting Engagement
   Stay engaged in meetings with real-time summaries and key action items. If you miss a meeting, Copilot provides a concise catch-up so you’re always in the loop.
2. Efficient Email Management
   Copilot simplifies email overload by summarizing long threads and even drafting responses for you.
3. Writing Assistance
   Draft, edit, and summarize documents effortlessly. Whether it’s a professional report or a creative article, Copilot elevates your writing.
4. Presentation Development
   Starting a presentation is as simple as typing a natural-language command. Copilot converts your ideas into visually stunning slides.
5. Data Analysis and Visualization
   Quickly analyze trends, generate insights, and create charts—all powered by Copilot.
6. Security and Compliance
   Copilot ensures your data remains safe by adhering to enterprise-grade compliance and privacy standards.
7. User Control
   You remain in control, choosing which AI suggestions to accept, modify, or discard, keeping the human element central.

Logical Architecture: Behind the Scenes

Understanding the logical flow of Microsoft 365 Copilot helps appreciate its complexity and security. Here’s how it works:

1. Input Prompt
   You begin by providing an input—whether typing in Word, asking a question in Teams, or prompting in PowerPoint.
2. Grounding
   Copilot preprocesses your input to make it specific and actionable. For example, if you ask, “Summarize this email thread,” Copilot identifies key points within the email and prepares a precise request for the LLM.
3. LLM Processing
   The enhanced prompt is sent to the LLM hosted in the Microsoft Cloud. It generates a response tailored to your needs while ensuring your organizational data isn’t used to train the model.
4. Post-Processing
   Copilot reviews the LLM response, running additional grounding queries to the Microsoft Graph for accuracy. This step includes checks for:
   • Responsible AI compliance
   • Security and privacy adherence
   • Command generation for actionable insights
5. Response Delivery
   Copilot returns the response to the app, allowing you to review, refine, or use it as is.Figure 1, Microsoft 365 Copilot Architecture [1]

Privacy and Security at Its Core

Microsoft 365 Copilot is built with a strong commitment to security and privacy. Here’s how it keeps your data safe:

• No Training on Your Data: The LLM is not trained on your organizational data.
• Microsoft Graph Boundary: Data used by Copilot stays within the Microsoft 365 service boundary.
• Encryption: All communication between your organization and Copilot components is encrypted.
• Inherited Policies: Copilot automatically aligns with your organization’s security, compliance, and privacy policies.

How Does Copilot Handle a Task?

Let’s break down an example of Copilot in action:

• Task: Summarize a long email thread.
• Step 1: You input the prompt: “Summarize this thread.”
• Step 2: Copilot preprocesses the input, analyzing the email content and identifying key details.
• Step 3: It sends the refined request to the LLM for processing.
• Step 4: The LLM generates a concise summary, which Copilot reviews for relevance and compliance.
• Step 5: The summary is delivered to you, ready for review and use.

Why Microsoft 365 Copilot Matters

By combining the power of AI with your unique work context, Microsoft 365 Copilot redefines what’s possible in the workplace. It allows you to focus on higher-value tasks while automating repetitive ones, fostering innovation, and enhancing collaboration.

What’s Next?

In the next blog, we’ll explore Copilot’s architecture and deployment in more detail. You’ll learn how organizations can implement and optimize this tool to empower teams and drive adoption effectively.

References:

[1] Wwlpublish. (n.d.). Explore how Microsoft 365 Copilot works – Training | Microsoft Learn. https://learn.microsoft.com/en-us/training/modules/introduction-microsoft-365-copilot/3-how-copilot-works