💡 Our Technical Review in summary
Summary
- Microsoft is introducing a Pay-As-You-Go (PAYG) billing model for the Microsoft 365 Copilot Retrieval API, starting in early 2026.
- This update allows organizations to extend Retrieval API access to users who do not have a dedicated Microsoft 365 Copilot license.
- Users with existing Microsoft 365 Copilot licenses will continue to access the Retrieval API at no additional cost.
- The feature is disabled by default and requires at least one active Microsoft 365 Copilot license in the tenant to be enabled.
Impact
- Expanded Access: Non-licensed users can now utilize the Retrieval API to ground LLM (Large Language Model) responses in tenant-level data sources such as SharePoint and Copilot connectors.
- Data Governance: Personal user-level data (e.g., OneDrive) remains strictly inaccessible to non-licensed users, even under the PAYG model.
- Billing Control: Admins gain a new “Pay-as-you-go” section under the Copilot Billing & usage menu in the Microsoft 365 admin center to manage consumption and costs.
- Deployment Scope: Admins can limit PAYG access to specific Entra ID groups or enable it for all non-licensed users.
- Timeline: Public Preview begins late January 2026, with General Availability (GA) expected by early March 2026.
Action Required
- Verify Licensing: Ensure the tenant maintains at least one active Microsoft 365 Copilot license to qualify for the PAYG option.
- Configure Settings: Navigate to Copilot → Billing & usage → Pay-as-you-go in the Microsoft 365 admin center to enable the feature once it rolls out.
- Define Access Scope: Identify which Entra ID groups should have access to the PAYG API. It is recommended to start with specific groups rather than the entire organization to manage costs.
- Review Security: Confirm that tenant-level data permissions (SharePoint/Connectors) are correctly configured, as the API respects existing access controls.
- Update Documentation: Revise internal IT support and developer documentation to reflect the new API availability and billing structure.
Microsoft Official Update
Service: N/A
Category: stayInformed
Severity: normal
[Introduction]
We’re adding support for pay-as-you-go (PAYG) consumption for the Microsoft 365 Copilot Retrieval API. This update gives organizations a flexible way to extend Retrieval API access to users without Microsoft 365 Copilot licenses, while keeping admin control over data access and billing. Users with Copilot licenses will continue to be able to access the Retrieval API at no additional cost.
[When this will happen]
- Public Preview Release (Worldwide): We will begin rolling out in Preview in late January 2026 and expect to complete by early February 2026.
- General Availability (Worldwide): We will begin rolling out in GA in late February 2026 and expect to complete by early March 2026.
[How this affects your organization]
Who is affected:
- Admins managing Microsoft 365 Copilot services and billing
- Tenants using or planning to use the Copilot Retrieval API
What will happen:
- A new PAYG option for the Copilot Retrieval API becomes available in the Microsoft 365 admin center under Copilot → Billing & usage → Pay-as-you-go.
- When enabled by an admin, non-Copilot licensed users can use the Retrieval API to access these tenant-level Microsoft 365 data sources:
- SharePoint
- Copilot connectors
- User-level data sources (for example, OneDrive) will remain unavailable to non-Copilot licensed users.
- A minimum of one Microsoft 365 Copilot license must be active in the tenant to enable the PAYG feature.
- The feature is off by default and requires explicit admin configuration.
[What you can do to prepare]
- Ensure your tenant has at least one Microsoft 365 Copilot license.
- Decide whether to enable PAYG for:
- Specific groups (recommended), or
- All non-Copilot licensed users.
- Review and update any internal documentation related to Copilot usage or data access controls.
- If needed, communicate the change to your helpdesk or impacted user groups.
- Configure the feature in the Microsoft 365 admin center under Copilot → Billing & usage → Pay-as-you-go.
[Compliance considerations]
| Question | Answer |
| Does the change alter how existing customer data is processed, stored, or accessed? If so, how? | Yes. When admins enable PAYG, non-Copilot licensed users can access tenant-level Microsoft 365 data through the Copilot Retrieval API. User-level data (such as OneDrive) is not accessible to unlicensed users. |
| Does the change introduce or significantly modify AI/ML or agent capabilities that interact with customer data? If so, summarize the changes. | Yes. This expands who can use the Copilot Retrieval API to ground large language model responses in Microsoft 365 data, extending access to non-Copilot licensed users under admin control. |
| Does the change include an admin control, and can it be managed through Entra ID group membership? | Yes. Admins decide whether PAYG is enabled, and they can scope access to specific groups using Entra ID. |
| Does the change allow a user to enable or disable the feature themselves? | Yes. Users gain access automatically once an admin enables PAYG; users cannot self-enable or self-disable the feature. |
