The managing director of an engineering firm signs the quote for Microsoft 365 Copilot. IT assigns the licences, and the SharePoint permissions have been tidied up. Three weeks later, a project lead asks whether she may summarise a client contract in Copilot, and whether she can still use ChatGPT for her English emails. Nobody knows, because there is a licence but no policy.
That is the difference this article is about. The licence determines what Microsoft does with your data. The AI policy determines what your own people may do with it, and no licence covers that. Six rules are enough, and they fit on one page.
Why is a licence not a policy?
A Copilot licence answers a question about the vendor. Microsoft 365 Copilot does not use prompts, responses or Graph data to train its underlying models, processing stays within the Microsoft 365 service boundary and there is a data processing agreement in place. What that means exactly, and where its limits lie, is set out in the privacy risks of Copilot.
The policy answers a different question: what an employee may do with it on a Tuesday afternoon. May a client contract go in, or a job application, or a medical report? Who switches on a connector to an external source? And what applies to the tools people use alongside it? Microsoft cannot answer those, because they are questions about your organisation.
The wider decisions about Copilot, from the permission structure to who assesses a new use, are covered in Microsoft Copilot governance. This article is about the policy that follows from them, short enough to read when it matters.
Which six rules do you set?
| Rule | What you record | Why it is in there |
|---|---|---|
| Who | Who holds a licence for the paid variant, who works with Copilot Chat | Licences are assigned per person, and that choice determines what Copilot can read on that person's behalf |
| Which variant | Only signed in with a work account; the consumer version gets its own status | Three services are called Copilot, and one of them has no business data protection |
| Which data | For each category: may go in, may go in under a condition, never goes in | Microsoft's training commitment says nothing about what may be sent |
| Which connectors | Which connectors, agents and plug-ins are on, and who signed them off | Every connector widens what Copilot can read, and so what can end up in an answer |
| The other tools | A status for each AI tool used alongside Copilot, with Copilot as the preferred tool where it fits | A Copilot policy that is silent on ChatGPT leaves most of the use unaddressed |
| Measurement | Which figures you look at, how often and that no individual appears in the data | Without measurement, compliance is an assumption; with the wrong measurement, it is surveillance |
Each row becomes one or two sentences in the policy, with a name and a date. If you cannot put a name to a row, that rule has not been set yet.
How short can it be?
Shorter than most organisations dare. The engineering firm's policy ended up like this: licence holders are on IT's list; Copilot only with a work account, and the consumer version is not allowed; client data may go into the paid variant, but personal data of applicants and staff may not; connectors are switched on by one administrator and listed with an owner; ChatGPT and Perplexity are set to limited use, for public information only, with Copilot as the preferred tool; the share of use through allowed tools is reviewed every quarter, without names.
That is half a page. A lawyer checked it, which is sensible, because the sentence about applicants touches on the GDPR and the sentence about measurement touches on the works council rules. But the wording is the firm's own, not a template's. How to build a policy like that from the questions people actually ask is covered in our guide to writing an AI policy.
What about the tools used alongside Copilot?
This is the rule most often missing, because the policy is called the "Copilot policy". A month after rollout, when the firm looked at which AI tools were being opened in the browser, Copilot was at the top. Below it came ChatGPT, Perplexity, a translation tool and two tools for reading technical drawings. Nothing had ever been decided about the last two, because nobody knew they existed.
Nobody had broken the policy. The policy was about Copilot, and these tools were not Copilot. Why people use other tools alongside Copilot is a question in its own right; for the policy, what matters is that every tool in use gets a status: allowed, limited use with a condition the organisation sets itself, no decision yet or not allowed. Copilot is then one row in that register, and the other tools sit below it.
