If you've sat in on a planning conversation about AI tools this year, chances are "Copilot" and "ChatGPT" got thrown around like they're two competing brands fighting for the same job. They're related, but they're not quite competitors in the way most people assume. One is a chat assistant built and shipped by the company that trains the underlying AI models. The other is Microsoft's AI layer, wrapped around the apps your business already runs, powered largely by models Microsoft licenses from that same company.
That relationship matters, because it changes what each tool is actually good at, what it costs, and in a lot of cases, whether your business needs one, the other, or both.
A Quick Note: Which "Copilot" Are We Talking About?
Microsoft has used the "Copilot" name across several distinct products, which is a big source of the confusion. This article focuses on Microsoft 365 Copilot and Copilot Chat, the AI assistant built into Word, Excel, PowerPoint, Outlook and Teams, since that's the version most relevant to a business evaluating an everyday AI assistant. There's also GitHub Copilot, a separate product built specifically for developers writing code (with its own pricing and features, briefly covered below), and the consumer Copilot app bundled into some personal Microsoft 365 subscriptions. If someone in your business says "we should get Copilot," it's worth clarifying which one they mean before you commit to a licence.
What Is Microsoft Copilot?
Microsoft 365 Copilot is an AI assistant layered on top of the Microsoft 365 apps your team already uses. In Word, it drafts and rewrites documents. In Excel, it analyses data and builds formulas. In PowerPoint, it turns a document into a slide deck. In Outlook and Teams, it summarises long email threads and meetings and can draft replies. There's also a standalone Copilot Chat interface that looks and feels a lot like a typical AI chatbot.
The feature that actually differentiates Copilot from a generic chatbot is what Microsoft calls grounding. Because Copilot is built on Microsoft Graph, it can (with the right permissions in place) search your organisation's own emails, Teams chats, SharePoint and OneDrive files before answering a question. Ask it to summarise "what did the finance team decide about the Q3 budget," and it can pull that answer from your actual internal conversations and documents, rather than requiring you to paste them in manually. It's also built to respect your existing permissions: if a file is restricted to certain people, or carries a sensitivity label, Copilot won't surface it to someone who couldn't already access it.
What a lot of businesses don't realise is that Copilot doesn't run on a model Microsoft built from scratch. It runs on models developed by OpenAI, the same company behind ChatGPT, which Microsoft licenses and integrates into its own products. As of mid-2026, Microsoft has confirmed that OpenAI's latest GPT-5.6 model family (specifically the "Sol" variant) is the preferred model powering Word, Excel, PowerPoint, Copilot Chat and Microsoft's newer "Cowork" features, this despite plenty of public commentary about Microsoft and OpenAI's commercial relationship becoming more complicated over time. In practice, that means the intelligence behind Copilot and the intelligence behind ChatGPT is often, at any given moment, the very same underlying model, just wrapped in different products.
What Is ChatGPT?
ChatGPT is OpenAI's own product, available as a website, desktop app and mobile app, independent of any Microsoft software. Because OpenAI builds both the model and the product, new capabilities tend to land in ChatGPT first, before flowing out to partners like Microsoft.
As of July 2026, OpenAI's current flagship model family is GPT-5.6, released in three variants: Sol (the most capable, for the hardest reasoning and coding tasks), Terra (a balanced, everyday-use model) and Luna (a fast, low-cost option for simple tasks). Which of these you get access to, and how much of it, depends on your ChatGPT subscription tier.
ChatGPT's feature set has grown well beyond a simple text box. It includes Projects (grouping conversations and files by topic), Canvas (a collaborative document and code editor inside the chat), Advanced Voice (real-time spoken conversation), memory that persists across sessions, native image generation, web search, Deep Research for longer investigative tasks, custom GPTs that let businesses build their own purpose-built assistants, and an agent mode (recently consolidated into a feature OpenAI calls "ChatGPT Work") that can carry out multi-step tasks with less hand-holding.
The Real Difference: Where the AI Actually Lives
Once you get past the branding, the practical difference comes down to this: Copilot's strength is that it lives inside the tools you already use and can see your company's own data. ChatGPT's strength is that it's a single, flexible workspace that isn't tied to any one software ecosystem.
If your team lives in Outlook, Teams, Word and Excel all day, Copilot's ability to draft an email using context from your calendar and last week's Teams thread, without you copying and pasting anything, is genuinely useful and saves real time. But that convenience comes with a trade-off: Copilot's most powerful features are only as good as your Microsoft 365 environment underneath them, permissions, file organisation, licensing tier and all.
ChatGPT, by contrast, isn't gated by which productivity suite you use. It works the same whether your business runs Microsoft 365, Google Workspace, or a mix of tools. It generally gets access to OpenAI's newest capabilities (new voice features, new agent behaviour, new image generation) before those capabilities show up anywhere else, including inside Copilot. And because it isn't grounded in your company data by default, it's arguably a safer default for tasks that don't need your internal files, general research, drafting, brainstorming, coding help, at the cost of you having to upload or paste in context manually when you do need it to work from your own documents.
Copilot vs ChatGPT: Side-by-Side
| Aspect | Microsoft Copilot | ChatGPT |
|---|---|---|
| Built by | Microsoft (using licensed OpenAI models) | OpenAI directly |
| Underlying model | OpenAI's GPT-5.6 family (Sol preferred, as of mid-2026) | OpenAI's GPT-5.6 family (Sol, Terra, Luna) |
| Where you use it | Word, Excel, PowerPoint, Outlook, Teams, Copilot Chat | Standalone web, desktop and mobile app |
| Reads your company files & emails | ✓ Automatically, via Microsoft Graph grounding (with permissions respected) | ✗ Only what you manually upload or paste in |
| Feature rollout speed | Follows Microsoft's release cadence; new OpenAI features arrive after ChatGPT | Usually first to get new OpenAI capabilities |
| Custom GPTs / agents | Copilot Studio (separate, more IT-driven setup) | Custom GPTs built directly in the ChatGPT interface |
| Entry-level pricing | From around $18–21/user/month (add-on to a Microsoft 365 licence) | Free tier available; Plus from $20/month |
| Works outside its ecosystem | Tied to Microsoft 365 subscriptions and apps | ✓ Works regardless of your productivity suite |
Pricing Breakdown
Microsoft 365 Copilot is generally licensed as an add-on to an existing Microsoft 365 business subscription, not a standalone product. For organisations under 300 seats, pricing has been discounted to around $18/user/month under a promotional rate (with a standard price closer to $21/user/month once that promotion ends). Larger enterprise customers are typically quoted around $30/user/month, billed annually on top of their existing Microsoft 365 plan. There's also a consumer-facing Copilot tier bundled into personal Microsoft 365 subscriptions at a lower monthly cost, aimed at individuals rather than businesses.
ChatGPT pricing is more tiered. There's a free plan with limited access to the current model family, a budget Go tier at around $8/month, the standard Plus plan at $20/month, and Pro plans at $100–$200/month for power users who need the highest usage limits and access to the flagship Sol model. For teams, Business pricing sits at roughly $20–25/user/month depending on billing terms, and Enterprise is custom-quoted, typically for organisations with more complex security, admin and data-governance requirements.
GitHub Copilot, for context, is priced and licensed entirely separately: a free tier with limited completions, Pro at around $10/month for individual developers, higher Pro+ and Max tiers for heavy agentic coding use, and Business/Enterprise tiers from roughly $19 to $39/user/month for organisations that need centralised policy control and a contractual guarantee that GitHub doesn't train on their code.
💡 Worth checking before you buy: Microsoft 365 Copilot pricing and inclusions change fairly often, and what's bundled into your existing Microsoft 365 plan versus what needs the Copilot add-on isn't always obvious from the licensing portal. It's worth getting a proper read on your current tenant before committing to seats across the business.
Data Security & Compliance for Business
For most Melbourne businesses, this is the section that actually decides the conversation, not the feature list.
Microsoft 365 Copilot does not train its underlying models on your organisation's data, and interactions stay within your Microsoft 365 tenant boundary. Because it's grounded in Microsoft Graph, it automatically enforces the data governance controls you've already set up: file permissions, sensitivity labels and information barriers all carry through, so Copilot won't expose a confidential document to someone who wasn't already allowed to see it. The catch is that this protection is only as good as your underlying Microsoft 365 security configuration. If permissions and sensitivity labelling haven't been properly set up, Copilot will happily surface whatever it can technically reach.
ChatGPT Enterprise and Business tiers encrypt data at rest and in transit, and OpenAI contractually guarantees no model training on data from paid Enterprise and Team/Business tiers. What ChatGPT doesn't do out of the box is understand your organisation's specific data sensitivity or permission structure, it's a standalone tool, so it has no automatic awareness of which documents are confidential unless you build that governance around how your team uses it.
Which Should Your Melbourne Business Choose?
In practice, this isn't always an either/or decision, but here's a reasonable way to think about it:
- Choose Copilot if your team is deeply embedded in Microsoft 365 already, and the biggest time-saver would be an assistant that can draft emails, summarise meetings and build spreadsheets using context it pulls from your own company data automatically.
- Choose ChatGPT if you want the most flexible, currently most capable general-purpose assistant, need custom GPTs for specific workflows, want the newest voice, image or agent features as soon as they're released, or your business isn't fully standardised on Microsoft 365.
- Consider both if different teams have different needs, some businesses license Copilot broadly for its Microsoft 365 integration, while giving specific staff (marketing, research, developers) a ChatGPT seat for tasks that benefit from its broader feature set.
Whichever direction you lean, the decision that actually matters most for a small or medium business is less "which AI is smarter" and more "do we have the licensing, security configuration and internal policy in place to roll this out safely." That's the part that's easy to get wrong, and expensive to fix after the fact.
Frequently Asked Questions
- Is Microsoft Copilot the same as ChatGPT? No. They're different products from different companies, but Microsoft 365 Copilot is largely powered by OpenAI's models (the same company that builds ChatGPT), licensed and integrated into Microsoft's own apps.
- Does Microsoft Copilot actually use ChatGPT's technology? Yes, in effect. Microsoft 365 Copilot runs on OpenAI's GPT model family under a commercial licensing arrangement, with GPT-5.6 confirmed as the preferred model as of mid-2026. It isn't literally the ChatGPT app, but the underlying AI model is largely the same.
- Is GitHub Copilot the same thing as Microsoft 365 Copilot? No, they're entirely separate products with different pricing and purposes. GitHub Copilot is built for writing and reviewing code; Microsoft 365 Copilot is built for productivity apps like Word, Excel and Outlook.
- Which is cheaper for a small business? On paper, ChatGPT Plus at $20/month per user is comparable to, or cheaper than, Copilot's per-seat add-on pricing. But Copilot is only sold as an add-on to an existing Microsoft 365 licence, so the real comparison depends on what you're already paying for Microsoft 365.
- Can we use both in the same business? Yes, plenty of organisations do, licensing Copilot for staff embedded in Microsoft 365 workflows, and ChatGPT seats for teams that need its broader feature set or aren't Microsoft-centric.
If you're weighing up an AI rollout for your business and want an honest, vendor-neutral read on what actually fits your environment, licensing and security posture, that's exactly the kind of assessment our Data & AI Solutions team runs for Melbourne businesses every week.