Many Australian businesses have already taken the first step with AI by enabling Microsoft 365 Copilot.
The next challenge is making sure it actually supports the kind of work teams do every day, especially when tasks involve deep analysis, large documents, or careful decision-making.
That is why Microsoft’s latest update is worth paying attention to.
From 7 January 2026, Australian businesses can now use Anthropic Claude AI models directly inside Microsoft 365 Copilot. This gives organisations more choice in how AI supports research, analysis, writing, and automation, without changing pricing or security arrangements.
Rather than replacing existing Copilot capabilities, Claude becomes another option that teams can select when the task calls for stronger reasoning or deeper document handling.
For business and IT leaders, this shift is less about chasing the newest model and more about matching the right AI to the right job.
In this guide, I break down what has changed, why Claude stands out for certain types of work, how it fits within Microsoft’s security model, and what Australian businesses should consider when enabling it as part of a broader Copilot plan.
What Has Changed and Why It Matters
Microsoft has added Anthropic as an official AI partner within Microsoft 365 Copilot. In practical terms, this means Claude can now be used across several Copilot experiences alongside Microsoft’s existing AI models.
This matters because AI performance varies by task. Some models are better for fast responses, while others perform better when work requires structured thinking, careful reasoning, or reviewing large volumes of content.
Claude is now available in:
Copilot Researcher for gathering, analysing, and summarising information
Copilot Studio for building custom AI agents
Excel Agent Mode for formulas, analysis, and trend identification
Word, Excel, and PowerPoint agents for document creation and review
From a security and compliance point of view, Claude operates as a Microsoft subprocessor.
That means it works under the same contractual, privacy, and security controls that already apply to Microsoft 365. Your data remains within the boundaries you have already agreed to.
What This Means for Australian Businesses
For Australian businesses, this update provides flexibility without introducing extra cost or complexity.
More Choice Without Higher Costs
There is no additional licence required to use Claude. If you already have Microsoft 365 Copilot, Claude is included.
Indicative pricing remains:
Around AUD $44 per user per month for Copilot, depending on your plan
No extra charge for choosing Claude over the default model
Microsoft is also running promotional pricing until 31 March 2026.
For many businesses, this creates an opportunity to trial Copilot more broadly or expand usage as part of a planned rollout rather than an isolated test.
Data Residency and Security Remain Consistent
For Australian organisations, Microsoft continues to store and process data in Australian data centres where applicable. When Claude is used through Microsoft 365 Copilot, the same data handling and protection rules apply.
Anthropic is required to meet Microsoft’s security standards. This is an important distinction compared to staff using public AI tools outside approved platforms, which often introduces risk without visibility.
Availability and Administrative Control
Claude is enabled by default for most Australian commercial tenants. In some specialised environments, such as government or regulated clouds, it may be disabled by default.
Administrators remain in control. Claude can be enabled, restricted, or disabled at any time through Microsoft’s admin settings.
Why Some Teams Prefer Claude for Certain Types of Work
Microsoft 365 Copilot continues to rely on OpenAI models by default. Claude does not replace them. Instead, it gives teams an alternative when the task requires a different strength.
Stronger Reasoning for Complex Tasks
Claude performs well when work involves step-by-step thinking. This includes policy review, scenario analysis, and tasks where accuracy and clarity matter more than speed.
Teams working with risk assessments, internal controls, or technical documentation often notice the difference.
Handling Large Documents Without Losing Context
Claude can work with very large documents in a single session. This makes it suitable for reviewing long reports, contracts, or compliance material without missing key details.
For Australian businesses dealing with audits, tenders, or regulatory documentation, this reduces manual effort while keeping work inside Microsoft 365.
Clearer Summaries With Better Traceability
Claude is known for producing structured summaries and for clearly referencing where information comes from within a document.
This is valuable in environments where outputs need to be reviewed, shared with stakeholders, or used to support decisions.
A More Cautious Approach to Sensitive Work
Claude is designed to be conservative in its responses. It is more likely to acknowledge uncertainty and explain its reasoning rather than provide overconfident answers.
This behaviour suits compliance-heavy environments where AI output is reviewed and validated rather than accepted at face value.
Practical Ways Businesses Are Using Claude
Claude is not intended to be used for every task. It delivers the most value when matched to the right scenarios.
Research and Analysis
Using Copilot Researcher, teams can ask Claude to review internal documents, public information, or a combination of both.
Common examples include:
Summarising industry trends
Reviewing competitor positioning
Pulling themes from customer or stakeholder feedback
This is particularly useful for strategy, planning, and policy-related work.
Excel and Data Analysis
In Excel Agent Mode, Claude can help generate formulas, identify data issues, and explain trends in plain language.
Finance and operations teams often use this capability to reduce time spent troubleshooting spreadsheets and to gain confidence in their analysis.
Writing and Document Review
Claude supports drafting, editing, and summarising content in Word and PowerPoint. It works well for reports, proposals, and internal documentation where clarity and tone matter.
Rather than replacing human review, it accelerates first drafts and improves consistency.
Custom Agents Built in Copilot Studio
When building custom agents, Claude’s reasoning strengths become more visible. Agents built on Claude are often better at handling conditional logic, exceptions, and multi-step workflows.
This suits scenarios such as HR policy guidance, internal knowledge bases, and structured service requests.
Cost and Licensing Overview
There is no additional cost to use Claude with Microsoft 365 Copilot.
Your pricing depends on your Microsoft 365 plan:
Plan
Approx. Cost per User (AUD)
Notes
Business Basic + Copilot
From $36 (promotional)
Entry level with AI
Business Standard + Copilot
From $52.60 (promotional)
Core apps plus AI
Business Premium + Copilot
From $67.62 (promotional)
Added security and device management
E3 or E5 + Copilot
$50 to $60 add-on
Enterprise environments
Pricing subject to change.
Promotional pricing ends 31 March 2026. Microsoft has also advised that base Microsoft 365 pricing will increase from July 2026, which makes early planning important.
How to Enable Claude in Microsoft 365 Copilot
While governance and planning should come first, enabling Claude itself is straightforward.
Step 1: Confirm Prerequisites
You will need:
Microsoft 365 Business, E3, or E5
Microsoft 365 Copilot licences
An eligible Australian tenant
Step 2: Enable Claude in the Microsoft 365 Admin Centre
A Global Administrator must complete the following steps:
Open the Microsoft 365 Admin Centre
Navigate to Copilot, then Settings
Select Data Access
Choose AI providers operating as Microsoft subprocessors
Enable Anthropic as a Microsoft subprocessor
This change usually takes effect quickly.
Step 3: Make Claude Available to Users
Once enabled, users can select Claude in:
Copilot Researcher
Copilot Studio
Excel Agent Mode
Word and PowerPoint agents
No additional installation or end-user configuration is required.
Step 4: Additional Setup for Copilot Studio
If you plan to use Claude in Copilot Studio, administrators must also enable external language models in the Power Platform Admin Centre. This allows custom agents to use Claude as part of their workflow logic.
Governance and Control Considerations
When Claude is enabled, prompts and responses are processed by Anthropic under Microsoft’s agreements. Data protection, retention, and security controls remain consistent with your Microsoft 365 environment.
Administrators can disable Claude at any time if requirements change.
In practice, the strongest results come when businesses pair technical enablement with:
Clear use cases
Role-based training
Simple guidance on when to use each model
Final Thoughts for Australian Businesses
This update is not about chasing the latest AI model. It is about fit for purpose AI.
Claude gives Australian businesses another option inside Microsoft 365 Copilot, without extra cost or added risk. For work that involves deep analysis, large documents, or careful reasoning, it can deliver better outcomes when used intentionally.
The real opportunity is not just switching Claude on, but deciding where it makes sense as part of a broader Copilot plan.
With the right structure, governance, and support, this addition helps teams get more value from the tools they already use every day.
Looking to start leveraging the power of Claude through Microsoft Copilot in your business?
Let’s talk!
About the Author
Carlos Garcia is the Founder and Managing Director of CG TECH, where he leads enterprise digital transformation projects across Australia.
With deep experience in business process automation, Microsoft 365, and AI-powered workplace solutions, Carlos has helped businesses in government, healthcare, and enterprise sectors streamline workflows and improve efficiency.
He holds Microsoft certifications in Power Platform and Azure and regularly shares practical guidance on Copilot readiness, data strategy, and AI adoption.
Many Australian businesses have already taken the first step with AI by enabling Microsoft 365 Copilot.
The next challenge is making sure it actually supports the kind of work teams do every day, especially when tasks involve deep analysis, large documents, or careful decision-making.
That is why Microsoft’s latest update is worth paying attention to.
From 7 January 2026, Australian businesses can now use Anthropic Claude AI models directly inside Microsoft 365 Copilot. This gives organisations more choice in how AI supports research, analysis, writing, and automation, without changing pricing or security arrangements.
Rather than replacing existing Copilot capabilities, Claude becomes another option that teams can select when the task calls for stronger reasoning or deeper document handling.
For business and IT leaders, this shift is less about chasing the newest model and more about matching the right AI to the right job.
In this guide, I break down what has changed, why Claude stands out for certain types of work, how it fits within Microsoft’s security model, and what Australian businesses should consider when enabling it as part of a broader Copilot plan.
What Has Changed and Why It Matters
Microsoft has added Anthropic as an official AI partner within Microsoft 365 Copilot. In practical terms, this means Claude can now be used across several Copilot experiences alongside Microsoft’s existing AI models.
This matters because AI performance varies by task. Some models are better for fast responses, while others perform better when work requires structured thinking, careful reasoning, or reviewing large volumes of content.
Claude is now available in:
From a security and compliance point of view, Claude operates as a Microsoft subprocessor.
That means it works under the same contractual, privacy, and security controls that already apply to Microsoft 365. Your data remains within the boundaries you have already agreed to.
What This Means for Australian Businesses
For Australian businesses, this update provides flexibility without introducing extra cost or complexity.
More Choice Without Higher Costs
There is no additional licence required to use Claude. If you already have Microsoft 365 Copilot, Claude is included.
Indicative pricing remains:
Microsoft is also running promotional pricing until 31 March 2026.
For many businesses, this creates an opportunity to trial Copilot more broadly or expand usage as part of a planned rollout rather than an isolated test.
Data Residency and Security Remain Consistent
For Australian organisations, Microsoft continues to store and process data in Australian data centres where applicable. When Claude is used through Microsoft 365 Copilot, the same data handling and protection rules apply.
Anthropic is required to meet Microsoft’s security standards. This is an important distinction compared to staff using public AI tools outside approved platforms, which often introduces risk without visibility.
Availability and Administrative Control
Claude is enabled by default for most Australian commercial tenants. In some specialised environments, such as government or regulated clouds, it may be disabled by default.
Administrators remain in control. Claude can be enabled, restricted, or disabled at any time through Microsoft’s admin settings.
Why Some Teams Prefer Claude for Certain Types of Work
Microsoft 365 Copilot continues to rely on OpenAI models by default. Claude does not replace them. Instead, it gives teams an alternative when the task requires a different strength.
Stronger Reasoning for Complex Tasks
Claude performs well when work involves step-by-step thinking. This includes policy review, scenario analysis, and tasks where accuracy and clarity matter more than speed.
Teams working with risk assessments, internal controls, or technical documentation often notice the difference.
Handling Large Documents Without Losing Context
Claude can work with very large documents in a single session. This makes it suitable for reviewing long reports, contracts, or compliance material without missing key details.
For Australian businesses dealing with audits, tenders, or regulatory documentation, this reduces manual effort while keeping work inside Microsoft 365.
Clearer Summaries With Better Traceability
Claude is known for producing structured summaries and for clearly referencing where information comes from within a document.
This is valuable in environments where outputs need to be reviewed, shared with stakeholders, or used to support decisions.
A More Cautious Approach to Sensitive Work
Claude is designed to be conservative in its responses. It is more likely to acknowledge uncertainty and explain its reasoning rather than provide overconfident answers.
This behaviour suits compliance-heavy environments where AI output is reviewed and validated rather than accepted at face value.
Practical Ways Businesses Are Using Claude
Claude is not intended to be used for every task. It delivers the most value when matched to the right scenarios.
Research and Analysis
Using Copilot Researcher, teams can ask Claude to review internal documents, public information, or a combination of both.
Common examples include:
This is particularly useful for strategy, planning, and policy-related work.
Excel and Data Analysis
In Excel Agent Mode, Claude can help generate formulas, identify data issues, and explain trends in plain language.
Finance and operations teams often use this capability to reduce time spent troubleshooting spreadsheets and to gain confidence in their analysis.
Writing and Document Review
Claude supports drafting, editing, and summarising content in Word and PowerPoint. It works well for reports, proposals, and internal documentation where clarity and tone matter.
Rather than replacing human review, it accelerates first drafts and improves consistency.
Custom Agents Built in Copilot Studio
When building custom agents, Claude’s reasoning strengths become more visible. Agents built on Claude are often better at handling conditional logic, exceptions, and multi-step workflows.
This suits scenarios such as HR policy guidance, internal knowledge bases, and structured service requests.
Cost and Licensing Overview
There is no additional cost to use Claude with Microsoft 365 Copilot.
Your pricing depends on your Microsoft 365 plan:
Promotional pricing ends 31 March 2026. Microsoft has also advised that base Microsoft 365 pricing will increase from July 2026, which makes early planning important.
How to Enable Claude in Microsoft 365 Copilot
While governance and planning should come first, enabling Claude itself is straightforward.
Step 1: Confirm Prerequisites
You will need:
Step 2: Enable Claude in the Microsoft 365 Admin Centre
A Global Administrator must complete the following steps:
This change usually takes effect quickly.
Step 3: Make Claude Available to Users
Once enabled, users can select Claude in:
No additional installation or end-user configuration is required.
Step 4: Additional Setup for Copilot Studio
If you plan to use Claude in Copilot Studio, administrators must also enable external language models in the Power Platform Admin Centre. This allows custom agents to use Claude as part of their workflow logic.
Governance and Control Considerations
When Claude is enabled, prompts and responses are processed by Anthropic under Microsoft’s agreements. Data protection, retention, and security controls remain consistent with your Microsoft 365 environment.
Administrators can disable Claude at any time if requirements change.
In practice, the strongest results come when businesses pair technical enablement with:
Final Thoughts for Australian Businesses
This update is not about chasing the latest AI model. It is about fit for purpose AI.
Claude gives Australian businesses another option inside Microsoft 365 Copilot, without extra cost or added risk. For work that involves deep analysis, large documents, or careful reasoning, it can deliver better outcomes when used intentionally.
The real opportunity is not just switching Claude on, but deciding where it makes sense as part of a broader Copilot plan.
With the right structure, governance, and support, this addition helps teams get more value from the tools they already use every day.
Looking to start leveraging the power of Claude through Microsoft Copilot in your business?
Let’s talk!
About the Author
Carlos Garcia is the Founder and Managing Director of CG TECH, where he leads enterprise digital transformation projects across Australia.
With deep experience in business process automation, Microsoft 365, and AI-powered workplace solutions, Carlos has helped businesses in government, healthcare, and enterprise sectors streamline workflows and improve efficiency.
He holds Microsoft certifications in Power Platform and Azure and regularly shares practical guidance on Copilot readiness, data strategy, and AI adoption.
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