Microsoft AI Technologies Reference

This section provides a comprehensive overview of Microsoft’s AI technology stack, from end-user productivity tools to infrastructure services.

Use this page as a reference after you’ve narrowed the decision: it’s optimized for confirming capabilities, boundaries, and status (GA/Preview) rather than teaching the selection process.

Problem-first reminder: Start with the business outcome and scenario, then pick the simplest technology that satisfies it. Use Scenarios to anchor real problems and the Decision Framework to gate technology choices.

Table of contents

  1. Microsoft AI Technologies Reference
    1. Table of contents
      1. Core AI Platforms
    2. Word, Excel, and PowerPoint Agents (Frontier) {: .tech-heading }
    3. Microsoft Scout (Experimental) {: .tech-heading }
    4. Copilot Studio
    5. Power Apps Plan Designer
    6. Microsoft Foundry (Azure)
    7. Foundry Agent Service {: .tech-heading }
      1. The Hosted Agent Constraint Card
    8. Agent 365 {: .tech-heading }
    9. Foundry Control Plane {: .tech-heading }
    10. Azure AI Search {: .tech-heading }
    11. Foundry IQ {: .tech-heading }
    12. Work IQ (Preview) {: .tech-heading }
    13. Web IQ (Limited Access) {: .tech-heading }
    14. Azure AI Content Understanding {: .tech-heading }
    15. AI Builder {: .tech-heading }
      1. Data & Analytics Platforms {: .no_toc }
    16. Microsoft Fabric {: .tech-heading }
      1. Local and Edge AI {: .no_toc }
    17. Foundry Local {: .tech-heading }
    18. Foundry Local on Azure Local (Preview) {: .tech-heading }
    19. Windows AI APIs and Windows ML {: .tech-heading }
    20. Microsoft Execution Containers (MXC) (Early Preview) {: .tech-heading }
      1. Developer Tools {: .no_toc }
    21. GitHub Copilot {: .tech-heading }
    22. GitHub Models {: .tech-heading }
    23. Visual Studio Code {: .tech-heading }
    24. Microsoft 365 Agents SDK & Toolkit {: .tech-heading }
    25. Agent Governance Toolkit (Public Preview) {: .tech-heading }
    26. Microsoft Agent Framework {: .tech-heading }
      1. Agent Runtime Alternatives (Preview) {: .no_toc }
    27. Technology Selection Quick Guide
    28. Network Isolation Decision Matrix
    29. Identity & Permissions Architecture {: .tech-heading }
      1. Implementation Approach {: .no_toc }
      2. Identity & Permissions Matrix {: .no_toc }
      3. Microsoft 365 Copilot: User-Scoped by Design {: .no_toc }
      4. Copilot Studio: Configurable Delegated or Service Accounts {: .no_toc }
      5. Microsoft Foundry (Azure) & Foundry Agent Service: RBAC + Managed Identity First {: .no_toc }
      6. Microsoft 365 Agents SDK: Bring Your Own Authentication {: .no_toc }

Core AI Platforms

Microsoft 365 Copilot

Description: Integrated AI assistant across M365 apps (Word, Excel, Teams, Outlook, PowerPoint, OneNote) with tenant context and Graph security. Supports extensibility via Declarative Agents (low-code) and custom engine agents (pro-code) for tailored productivity experiences. Official Docs: Microsoft 365 Copilot Overview Status: GA

Key Features:

  • Tenant-aware AI: Works across Word, Excel, Teams, Outlook, PowerPoint, and OneNote while inheriting Microsoft Graph security and compliance controls. (Updated Declarative Agents guidance - Retrieved: 2025-12-01)
  • Extensibility options: Build Declarative Agents with instructions, knowledge, and actions or bring custom engine agents for full orchestration control. (Agents for Microsoft 365 Copilot - Retrieved: 2026-01-07)
  • Unified discovery: Users can discover and install agents from the in-app store inside Word and PowerPoint, with Excel support in rollout. (Microsoft 365 Copilot release notes - Retrieved: 2026-03-25)
  • Admin governance: Admins can pre-approve trusted agents and audit usage to streamline tenant-wide deployments. (Microsoft 365 Copilot release notes - Retrieved: 2026-03-25)
  • Grounded knowledge: Agents can draw from Teams meetings, SharePoint, OneDrive, email, Dataverse, and approved connectors with tenant-scoped security. (Extend Microsoft 365 Copilot with agents - Retrieved: 2025-12-15)
  • Fine-tuning (Preview): Copilot Tuning lets makers fine-tune Declarative Agent models using tenant data under admin control. (Microsoft 365 Copilot release notes - Retrieved: 2026-03-25)
  • Copilot Cowork (Frontier Preview): Long-running, multi-step execution engine that delegates complex tasks using Anthropic’s agentic model + Work IQ grounding. Breaks requests into plans with visible checkpoints, human steering, and coordinated outputs across Word, Excel, PowerPoint, and Outlook. Runs in sandboxed cloud environment; auditable, permission-scoped, governed. Currently in Research Preview, rolling to Frontier program in late March 2026. (Copilot Cowork announcement - Published: 2026-03-09)
  • Wave 3 multi-model intelligence: Automatic model routing across OpenAI (GPT-5.2) and Anthropic (Claude) providers. Copilot selects the right model for each task - users choose Quick Response or Think Deeper modes without managing model selection. Claude available in mainline Copilot Chat via Frontier. (Wave 3 announcement - Published: 2026-03-09)
  • Agentic Copilot in apps (GA): Edit with Copilot in Excel and Word (formerly “Agent Mode”) creates, edits, and refines content using app-native tools - formulas, PivotTables, charts, tables. No longer a separate mode; this is core Copilot. PowerPoint and Outlook rolling out through spring 2026. (Wave 3 announcement - Published: 2026-03-09)
  • Researcher agent (GA): Pre-installed multi-step research agent with connected agent delegation. Admins connect specialized Declarative Agents to Researcher for domain-specific task handoff. (Microsoft 365 Copilot release notes - Retrieved: 2026-03-25)
  • Multi-agent workflows: Declarative Agents can connect to other agents for coordinated task completion. Researcher delegates to connected agents; users see inter-agent interaction. (Microsoft 365 Copilot release notes - Jan 27, 2026 - Retrieved: 2026-03-25)
  • Copilot Memory (Preview): Persistent personalization across sessions using Graph signals and conversation history. Users control, view, manage, disable, or clear memory at any time. (Microsoft 365 Copilot release notes - Sep 3, 2025 - Retrieved: 2026-03-25)
  • Voice input (GA): Speak to Copilot across mobile, desktop, and web in M365 apps including Outlook, Word, and PowerPoint. (Microsoft 365 Copilot release notes - Nov 25, 2025 - Retrieved: 2026-03-25)
  • Connector ecosystem expansion: 20+ new Copilot connectors since Oct 2025 including Coda, GitLab, Bitbucket, Asana, Smartsheet, Monday.com, Jira Data Center, Zendesk, Miro, Dropbox, Google Drive, Amazon S3, Veeva, and more. Explainable AI with inline citations for connector results. (Microsoft 365 Copilot release notes - Retrieved: 2026-03-25)

Recent Updates (2025–2026):

  • Oct 28, 2025: Static tabs for custom engine agents in Teams meetings and @mention routing for Copilot Chat to target specific agents. (Microsoft 365 Copilot release notes - Retrieved: 2026-03-25)
  • Nov 25, 2025: Voice input GA across platforms, shared mailbox access in Copilot Chat, audio overview customization for notebooks, file type/people filters in Chat. (Microsoft 365 Copilot release notes - Retrieved: 2026-03-25)
  • Dec 23, 2025: GPT-5 default model in Copilot Chat with automatic fast/reasoning routing, redesigned navigation pane with expanded chat history, custom agent engine support across Word and Excel, AI Video Creator with transcript editing, .NET/Python/TypeScript client libraries for M365 Copilot APIs. (Microsoft 365 Copilot release notes - Retrieved: 2026-03-25)
  • Jan 13, 2026: Copilot Library for centralized AI-generated assets, GPT-5 in Agent Builder for Declarative Agents, admin AI disclaimer customization. (Microsoft 365 Copilot release notes - Retrieved: 2026-03-25)
  • Jan 27, 2026: GPT-5.2 model selector (Quick Response vs Think Deeper), Researcher delegation, Loop-to-PowerPoint generation, and copying Agent Builder agents to Copilot Studio. Foundry-to-Microsoft 365 distribution is now Early Access Preview and must be evaluated from its current documentation rather than inherited from this release snapshot.
  • Feb 24, 2026: Declarative Agents upgraded to GPT-5.1 with auto-architecture, scoped grounding to specific data sources, embedded knowledge (up to 10 local files), URL-based dialogs to keep users in Copilot, and connector authentication simplification. (Microsoft 365 Copilot release notes - Retrieved: 2026-03-25)
  • Mar 9, 2026 (Wave 3): Copilot Cowork (Frontier Preview) - long-running multi-step execution with Anthropic + Work IQ. Multi-model intelligence (Claude in mainline Chat via Frontier). Agentic Copilot GA in Excel/Word (formerly Agent Mode). Agents in chat for end-to-end workflows (schedule meetings, draft emails, create docs from conversation). Microsoft 365 E7 announced ($99/user/month, GA May 1: M365 Copilot + Agent 365 + Entra Suite + E5 security). Agent 365 GA May 1 ($15/user/month). (Wave 3 blog - Published: 2026-03-09)
  • Mar 10-24, 2026: Context IQ for Teams channels, delegate calendar search, AI skill inferencing for E3/E5 users, Copilot Chat agent recommendations, explainable AI with inline citations for connectors. (Microsoft 365 Copilot release notes - Retrieved: 2026-03-25)

Network Isolation:

  • VNet Support: No custom VNet support
  • Fully managed SaaS (no VNet integration available)
  • Requires gateway architecture for private on-premises data access
  • Inherits M365 tenant network security
  • Ideal for: Organizations accepting Microsoft-managed SaaS networking model
  • Guidance: Microsoft recommends leveraging M365 admin controls and security policies to govern agent data access. (Data, privacy, and security considerations - Retrieved: 2025-09-05)

When to use: Broad productivity gains, existing M365 licenses, tenant-aware context, no deep AI expertise required, extend via low-code (Copilot Studio) or pro-code (M365 Agents SDK)

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Word, Excel, and PowerPoint Agents (Frontier) {: .tech-heading }

Description: Frontier creation agents inside Microsoft 365 Copilot Chat that draft Word, Excel, and PowerPoint files powered exclusively by Anthropic models after explicit admin opt-in. Available to both Copilot-licensed and unlicensed (Copilot Chat) M365 users. Official Docs: Word, Excel, and PowerPoint Agents (Frontier) Status: Frontier Preview (experimental; requires Frontier enrollment; available to Copilot-licensed AND unlicensed M365 users)

Key Features:

  • Frontier-gated access: Frontier is Microsoft’s early access program for experimental/preview features in Copilot apps and agents. Admins enable it in Microsoft 365 admin center (Copilot > Settings > User access > Copilot Frontier) and must connect the Anthropic provider before agents appear. Licensed users can ground creation agents with Work IQ organizational context. (Manage Microsoft 365 Copilot scenarios - Retrieved: 2026-03-16; Get started with Word, Excel, and PowerPoint Agents - Retrieved: 2026-03-30)
  • Document creation agents: Generate drafts for Word, Excel, or PowerPoint from prompts in the Copilot app, grounded by Microsoft Graph data the user is authorized to access. (Get started with Word, Excel, and PowerPoint Agents - Retrieved: 2026-03-30)
  • Data boundary and consent: Anthropic became a Microsoft subprocessor effective January 7, 2026 under Microsoft Product Terms/DPA. However, Anthropic models are excluded from EU Data Boundary and in-country processing commitments. Admins can disable the provider at any time. (Data Privacy and Security - Retrieved: 2026-03-30)
  • Storage and security: Generated files save to OneDrive; only user-permitted Graph context is shared, with sensitivity labels and compliance policies respected. (Data Privacy and Security - Retrieved: 2026-03-30)
  • Limitations: English-only preview, side-by-side pane is read-only, and users open the full app to edit. (Responsible AI FAQ - Retrieved: 2026-03-30)

When to use: Early testing of AI-generated Office documents when admins accept third-party processing under Frontier terms; avoid for regulated production workloads until Microsoft-hosted GA availability.

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Microsoft Scout (Experimental) {: .tech-heading }

Description: Microsoft’s first Autopilot agent - an always-on personal agent that works autonomously in the background to coordinate work across Teams, Outlook, OneDrive, and SharePoint. Scout represents a new category of agents that hold your priorities and act on your behalf under your control, without needing to be prompted each time. Official Docs: Microsoft Scout setup instructions Status: Experimental (Private Preview via Frontier; requires Frontier enrollment, Intune policy configuration, and a GitHub Copilot license)

Key Features:

  • Autopilot category: Scout belongs to a new class of always-on agents that operate with their own Entra identity, carry out tasks within org-defined permissions and policies, and keep work moving without constant prompting. Distinct from interactive (prompt-driven) copilots and from reactive trigger-based agents.
  • Proactive work coordination: Schedules and coordinates meetings across time zones, flags important meetings, generates prep materials, blocks calendar time for upcoming deliverables, and identifies risks such as stalled decisions before they become blockers.
  • Work IQ grounding: Powered by Work IQ - the same contextual intelligence layer that underlies Microsoft 365 Copilot. Connects to Teams, Outlook, OneDrive, SharePoint, chats, email, calendar, and contacts. Users interact with Scout in Teams; the desktop app extends reach to the browser, local resources, and MCP servers.
  • OpenClaw open-source foundation: Built on OpenClaw open-source technology. Microsoft contributes policy conformance directly upstream, enabling organizations running OpenClaw to validate security and compliance configuration with an auditable answer.
  • Enterprise identity and access controls: Each Scout session operates under a governed Microsoft Entra identity (not a shared service account). Credentials are scoped to the task, redacted from logs, and managed with first-party security rigor. Sensitive actions can require human sign-off before proceeding.
  • Purview integration: Microsoft Purview sensitivity labels and data loss prevention policies are enforced in the moment, before data is sent or written. Scout does not bypass existing data protection controls.
  • Frontier access model: Available as an experimental release through the Microsoft Frontier program. Requires Frontier enrollment, Intune policy configuration, and an opt-in attestation. Users with a GitHub Copilot license then download and install the experience.

When to use: Organizations in the Frontier program exploring always-on personal agents for proactive coordination, calendar management, and risk identification. Not suitable for production workloads until Microsoft releases broader availability. Use Microsoft 365 Copilot (prompt-driven) or Copilot Cowork (Frontier, task delegation with checkpoints) for work that does not require continuous autonomous background activity.

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Copilot Studio

Description: Low-code and pro-code authoring environment for building Declarative Agents and custom engine agents with governance, analytics, and multi-channel delivery. Available as a standalone web app and inside Microsoft Teams. Official Docs: Copilot Studio Documentation Implementation Guide: aka.ms/CopilotStudioImplementationGuide

Key Features:

  • New agent experience (Production-ready preview): A modern authoring/runtime path with enhanced orchestration quality, running alongside the classic experience. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Microsoft IQ and Foundry IQ connectivity: Ground agents with Microsoft 365 organizational context (emails, calendar, files, chats, people) and optionally connect to a tuned Azure AI Foundry knowledge base. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Composable skills and memory: Reusable skills can be authored once and shared across agents; memory can persist per-user preferences and patterns for more personalized responses. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Model portfolio and selection: GA support now includes Claude Sonnet 5 and GPT-5.5 Chat as primary models, with additional managed/external model options depending on region and policy. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Computer use automation (GA): Agents can automate web and desktop apps with governance controls, and standalone computer-use tools can be reused across agents and flows (Preview). (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Agent-to-agent orchestration: A2A is GA, and the new experience also adds preview support for connecting specialist agents for delegated execution patterns. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Workflow resilience: Asynchronous responses allow long-running agent flows to complete beyond the prior two-minute synchronous window. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Voice agent expansion: Real-time voice agents (Preview), Teams Phone Agent integration (Preview), consent-based recording, and hold/resume controls support more production-ready calling scenarios. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Governance and operations: Agent inventory schema, readiness status views (Preview), and per-agent Entra Agent IDs (Preview) strengthen enterprise governance and troubleshooting. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Evaluation maturity: Agent evaluations are GA, with multi-turn tests and REST API automation (Preview) for CI/CD-aligned quality gates. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Channel reach and extensibility: Publish to Microsoft 365 Copilot, Teams, web, and channels such as WhatsApp, while integrating external tools through MCP. (What’s new in Copilot Studio - Updated: 2026-07-15)

Recent Updates (2025–2026):

  • Jun 2026: New agent experience (production-ready preview), Microsoft IQ integration, reusable skills, and memory capabilities were introduced; Windows 365 for Agents MCP server reached GA; Foundry IQ and specialist-agent connections entered preview. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • May 2026: Computer use reached GA; asynchronous responses for long-running flows, M365 Copilot workflow nodes, and consent-based recording expanded enterprise automation and voice patterns. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Apr 2026: A2A became GA, while real-time voice agents, automated evaluations via REST API, and custom analytics metrics advanced testing and operations. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Mar 2026: Agent evaluations became GA with multi-turn test support; Work IQ integration (Preview) and expanded model availability accelerated grounded enterprise agents. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Oct-Nov 2025: MCP tooling, GPT-5 rollout milestones, SharePoint retrieval improvements, connected agents, and request-for-information workflow actions established the foundation for 2026 orchestration features. (What’s new in Copilot Studio - Updated: 2026-07-15)
  • Roadmap signal: Planned features continue through the Power Platform Release Planner, with delivery timing subject to Microsoft release-plan policy. (Power Platform release plan overview - Updated: 2026-07-02)

Feature maturity varies by capability. Verify per-feature GA/Preview status in Microsoft Learn before production commitments.

Network Isolation:

  • VNet Support: Supported via Microsoft-managed VNet data gateway; runtime remains in Power Platform. (VNet data gateway overview - Retrieved: 2026-01-06)
  • Makers can deploy managed environments with private endpoints to Azure resources through the Power Platform VNet data gateway. (VNet data gateway overview - Retrieved: 2026-01-06)
  • On-premises data gateway enables secure connectivity to local systems. (VNet data gateway overview - Retrieved: 2026-01-06)
  • Ideal for: Managed PaaS scenarios requiring low-code authoring with governed access to Azure or on-premises data.

When Copilot Studio is the Right Tool:

  • Rapidly extend Microsoft 365 Copilot with Declarative Agents tailored to teams or departments.
  • Build custom engine agents that orchestrate complex workflows while remaining inside Microsoft-controlled infrastructure.
  • Leverage Power Platform connectors, triggers, and ALM tooling without deep ML engineering.

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Power Apps Plan Designer

Description: AI-assisted solution architect that generates Dataverse tables, security roles, and app structures from natural language descriptions. Accelerates the “Feasibility” phase of development. Official Docs: Power Apps AI Overview Status: GA

Key Features:

  • Schema Generation: Automatically creates 3NF normalized Dataverse tables and relationships based on business descriptions.
  • Role Generation: Suggests and configures security roles appropriate for the solution.
  • App Scaffolding: Generates the initial canvas or model-driven app layout.
  • Agent Feed: Integrated feed for monitoring agent activities and human-in-the-loop requests (Early Access).

When to use: Rapid prototyping, overcoming “blank canvas” paralysis, or enabling makers to build complex data models without deep architectural skills.

Microsoft Foundry (Azure)

Description: The cloud-based implementation of the Microsoft Foundry ecosystem. A code-first environment for building, evaluating, and deploying AI solutions with Azure OpenAI, open-source, and custom models. Integrates with workforce tools such as Foundry Agent Service, prompt flow, and safety guardrails. Official Docs: What is Microsoft Foundry (Azure)? Status: GA

Key Features:

  • Broad model catalog: Access GPT-5, GPT-5-mini, GPT-5-nano, GPT-4.1, GPT-image-1, Sora video generation, and GPT RealTime audio models alongside open-source offerings. (What’s new in Azure OpenAI - Updated: 2026-02-27)
  • Provisioned throughput management: Reserve PTUs and enable spillover to automatically route excess traffic to standard deployments. (What’s new in Azure OpenAI - Updated: 2026-02-27)
  • Safety and routing: Use model router, prompt shields with spotlighting, and structured outputs to protect prompts while dynamically selecting eligible models. Because router membership changes frequently, validate model families, regions, pricing, and availability against the model router supported models table instead of hard-coding model names here. (Model router GA - Updated: 2026-03-24)
  • Workflow and evaluation tooling: Build end-to-end pipelines with prompt flow, evaluations, and integrated monitoring. (Microsoft Foundry documentation - Retrieved: 2026-03-13)
  • Agent readiness: Pair with Foundry Agent Service for managed agent orchestration using the same model deployments. (Microsoft Foundry documentation - Retrieved: 2026-03-13)

Recent Updates (2025–2026):

  • Mar 2026 (New Foundry Portal GA): The new Microsoft Foundry portal reached general availability for core scenarios such as model discovery, agent development on the Responses API, evaluations, fine-tuning, red teaming, and quota management. Do not inherit that GA label for every surface: Foundry IQ and A2A include Preview capabilities, Hosted Agent tooling has mixed maturity, and Microsoft 365 distribution is Early Access Preview. Foundry Workflows: Retiring from Preview without a GA path on December 1, 2026. Classic portal remains necessary for capabilities that have not moved. (New Microsoft Foundry portal GA overview - Retrieved: 2026-03-19)

    New Foundry Portal: GA vs Preview Breakdown (March 2026)

    Category GA Preview
    Discover Overview, Model catalog, Tools, Solution Templates, Search Agent Manifests, Ask AI
    Build Agents, Models, Fine-tuning, Tools, Data, Evaluations, Red teaming, Speech playgrounds Tracing, Optimization, Knowledge, Memory, Guardrails (agents), Monitoring
    Operate Quota, Admin Overview, Assets, Compliance, AI Gateway
    Other Home, Docs -

    Not supported in the new portal at GA (use Foundry classic): Standalone Azure OpenAI resources, Assistant creation, Audio playground, AI service fine-tuning, Content Understanding, prebuilt video prompts.

    Lifecycle gate—Foundry Workflows: Retiring from Preview without a GA path on December 1, 2026. For existing workflows, map the job rather than chasing a one-size-fits-all replacement: Agent Framework for code-first orchestration, Logic Apps for visual business processes, A2A for lightweight direct delegation, or exported YAML on Hosted Agents only when the complete constraint card fits.

  • Voice Live (Preview): Real-time voice agent capability powered by Azure Speech in Foundry Tools. Supports expanded model selection (GPT-Realtime, GPT-5, GPT-4.1, PHI), natural voice options, multilingual speech, semantic voice activity detection, avatar integration, and telephony via Azure Communication Services. Agents connect by agent ID, with no audio model deployment required (fully managed). SDKs available for Python, C#, JavaScript, and Java. Currently requires public endpoints (no VNet support). (Voice Live overview - Retrieved: 2026-03-19)
  • Sep 2025: GPT-5-codex reasoning model released for Codex CLI and VS Code integration. (What’s new in Azure OpenAI - Updated: 2026-02-27)
  • Aug 2025: GPT-5 series, Sora image-to-video generation, GPT RealTime GA, and provisioned spillover reached GA. (What’s new in Azure OpenAI - Updated: 2026-02-27)
  • May 2025: Sora video generation preview, prompt shield spotlighting, and model router preview introduced. (What’s new in Azure OpenAI - Updated: 2026-02-27)

Lifecycle & Migration:

  • Platform naming evolution: Azure AI Studio → Azure AI Foundry → Microsoft Foundry (current). Azure AI Services → Foundry Tools (current). The Azure resource type remains Microsoft.CognitiveServices/accounts. (Migrate from classic portal - Retrieved: 2026-03-19)

    The Rosetta Stone - Foundry Terminology Evolution:

    If you’ve been reading blogs, watching sessions, or referencing pre-2026 documentation, the vocabulary has shifted under your feet. This decoder ring maps old terms to current ones:

    Before After (Current)
    Azure AI Studio / Azure AI Foundry Microsoft Foundry
    Azure AI Services Foundry Tools
    Assistants API (Agents v0.5/v1) Responses API (Agents v2)
    Monthly api-version parameters v1 stable routes (/openai/v1/)
    Hub + Azure OpenAI + Azure AI Services resources Foundry resource (single, with projects)
    Multiple SDK packages (azure-ai-inference, azure-ai-generative, azure-ai-ml, AzureOpenAI()) Unified azure-ai-projects 2.x + OpenAI() against one project endpoint
    Threads, Messages, Runs, Assistants Conversations, Items, Responses, Agent Versions
  • Classic vs new portal: Two portal experiences exist (classic and new) that do NOT have feature parity. Validate capabilities in the portal, SDK samples, and Microsoft Learn before committing. (Migrate from classic portal - Retrieved: 2026-03-19)
  • SDK migration (azure-ai-inference retires May 30, 2026): Replace AzureOpenAI() with standard OpenAI() client pointing to services.ai.azure.com/openai/v1. Follow the migration guide. (Migrate from classic portal - Retrieved: 2026-03-19)
  • Assistants API sunsets August 26, 2026: Migrate to the Foundry Agent Service (Responses API). A migration tool is available. Threads → Conversations, Runs → Responses, Assistants → current agent definitions. Use Agent Framework for code-first orchestration, Logic Apps for visual processes, and A2A where direct delegation fits. Do not migrate onto Foundry Workflows: Retiring from Preview without a GA path on December 1, 2026.
  • Classic agents (v1) retire March 31, 2027: Agents created with client.agents.create_agent() in earlier SDK versions must migrate to client.agents.create_version() with structured agent definitions (kind, model, instructions fields). The migration guide covers code-level changes. GitHub Copilot can accelerate the rewrite. Assign the migration as an Issue and let the coding agent refactor the API calls. (Migrate to the new agents developer experience - Retrieved: 2026-03-19)
  • azure-ai-projects 2.x replaces 1.x: Version 2.x targets the new portal; version 1.x targets classic. Using mismatched versions causes errors. (Migrate from classic portal - Retrieved: 2026-03-19)

Context Windows:

  • GPT-5 series: Up to 400k tokens (272k input, 128k output) for reasoning workloads. (Foundry models sold directly by Azure - Retrieved: 2025-11-13)
  • GPT-5-chat: 128k token context for conversational scenarios. (Foundry models sold directly by Azure - Retrieved: 2025-11-13)
  • GPT-4.1: 1M token context for large document processing. (Foundry models sold directly by Azure - Retrieved: 2025-11-13)

Network Isolation:

  • Inbound isolation (GA): Disable public network access and configure private endpoints to your Foundry resource. Supports “Disabled” (private endpoint only) and “Selected networks” (IP/VNet allowlist) modes. (How to configure network isolation for Microsoft Foundry - Retrieved: 2026-03-19)
  • Outbound isolation, BYO VNet (GA): Inject the Agent client into a customer-managed virtual network subnet (delegated to Microsoft.App/environments, /27 or larger). Outbound traffic routes through your VNet to Azure PaaS resources over private endpoints. Bring your own Storage, AI Search, and Cosmos DB for end-to-end isolation. (How to configure network isolation for Microsoft Foundry - Retrieved: 2026-03-19)
  • Outbound isolation, Managed VNet (Preview): Microsoft provisions and manages the virtual network. Two modes: “Allow internet outbound” and “Allow only approved outbound” (restricts via service tags, private endpoints, and optional FQDN rules enforced through Azure Firewall). Simpler setup but currently in Preview. (Configure managed virtual network - Retrieved: 2026-03-19)
  • Network isolation is not air-gapping: Managed Foundry supports documented private-network and no-public-egress configurations, subject to feature, tool, project-age, and regional prerequisites. It is still a connected managed service. Check the current networking deep dive and tool matrix before promising isolation. Keep disconnected Foundry Local/Azure Local architectures separate.
  • Ideal for: Zero-trust deployments, regulated workloads, and sovereign data strategies. Use BYO VNet for GA-supported production isolation; evaluate Managed VNet for simplified preview scenarios.

When Microsoft Foundry (Azure) is the Right Tool:

  • Latency-sensitive or high-throughput applications needing direct control over model deployments and caching.
  • Custom AI pipelines, evaluations, or RAG systems that exceed low-code platform capabilities.
  • Teams with Azure engineering expertise that must combine private networking, governance, and model flexibility.

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Foundry Agent Service {: .tech-heading }

Description: Managed PaaS for agent definitions, tools, state, identity, and runtime infrastructure within Microsoft Foundry (Azure). The parent service is GA, but agent types, protocols, tools, publishing paths, and SDK packages carry independent lifecycle labels. Never use the platform label as a status shortcut. Official Docs: Foundry Agent Service Status: GA (May 2025; next-gen on Responses API: March 2026)

Key Features:

  • Managed runtime: Microsoft hosts compute, memory, and thread state with built-in tracing and Azure Monitor metrics. (Foundry Agent Service GA - Updated: 2026-01-21)
  • Agent-to-agent delegation: Incoming A2A endpoints are Preview. Direction matters: an outgoing compatibility table does not make the entire A2A surface GA. Use A2A for lightweight direct delegation, not as a synonym for deterministic workflow orchestration.
  • BYO storage: Bring Azure Cosmos DB for thread storage plus Azure AI Search and Azure Blob Storage for knowledge with private endpoints. (Foundry Agent Service GA - Updated: 2026-01-21)
  • Thread storage in Cosmos DB (GA): Standard setup provisions enterprise_memory containers (thread-message-store, system-thread-message-store, agent-entity-store) in your Cosmos DB for NoSQL account with BYO throughput. (Azure Cosmos DB integration with Azure AI Agents Service, retrieved 2025-04-30)
  • Trace agents SDK: Debug runs with thread-level insights, including inputs, tool calls, and outputs. Tracing maturity varies by agent type. Foundry Workflows: Retiring from Preview without a GA path on December 1, 2026. Do not read tracing support as a lifecycle endorsement.
  • Event triggers: Invoke agents from Azure Logic Apps or other workflows to respond to business events. (Foundry Agent Service GA - Updated: 2026-01-21)
  • VS Code integration: Microsoft Foundry VS Code extension deploys and configures agent tools, including MCP integrations. (Foundry Agent Service GA - Updated: 2026-01-21)
  • MCP tool & Deep Research: Connect to remote Model Context Protocol servers and run multi-step o3-deep-research investigations grounded by Bing Search. (What’s new in Foundry Agent Service - Updated: 2025-10-08)
  • Next-gen GA (Responses API): Built on OpenAI Responses API, wire-compatible with OpenAI agents. Open model support across DeepSeek, xAI, Meta, LangChain, and LangGraph. (Foundry Agent Service GA blog - Published: 2026-03-16)
  • MCP authentication expansion: Key-based, Entra Agent Identity, Managed Identity, and OAuth Identity Passthrough for user-delegated access patterns. (Foundry Agent Service GA blog - Published: 2026-03-16)
  • Evaluations (GA): Out-of-the-box evaluators (coherence, relevance, groundedness, safety), custom evaluators, and continuous production monitoring via Azure Monitor. (Foundry Agent Service GA blog - Published: 2026-03-16)
  • SDK consolidation: azure-ai-agents package deprecated; agents are now first-class operations on AIProjectClient in azure-ai-projects (Python 2.0.1 GA, Java 2.0.0 GA, .NET 2.0.0-beta.1). Use get_openai_client() to drive responses. (Foundry Agent Service GA blog - Published: 2026-03-16)

Built-in Tools (Knowledge):

  • Azure AI Search: Ground agents with indexed data, chat with your data
  • File Search: RAG with proprietary documents (Azure Blob Storage, local files). Uses vector stores (up to 10,000 files), automatic chunking/embedding (text-embedding-3-large), hybrid search (keyword + semantic), reranking
  • Grounding with Bing Search: Access real-time web information
  • Grounding with Bing Custom Search (GA June 2025): Enhanced responses with selected web domains
  • Microsoft Fabric (GA March 2025): Integrate with Fabric Data Agents for data analysis capabilities
  • SharePoint (Preview): Chat with private SharePoint documents, OBO authentication for security-trimmed access, leverages M365 Copilot API built-in indexing
  • Licensed Data: Proprietary data via licensed API keys (TripAdvisor, Morningstar, LexisNexis, LEGALFLY, etc.)

Built-in Tools (Action):

  • Function Calling: Custom stateless functions
  • Azure Functions: Intelligent, event-driven serverless code execution (classic agents only; not available in new Responses API agents - use MCP or Logic Apps instead)
  • Azure Logic Apps: 1,400+ connector-based workflows
  • Code Interpreter: Write and run Python code in sandboxed environment (data handling, visuals)
  • OpenAPI 3.0 Specified Tool: Connect to external APIs via OpenAPI spec
  • Model Context Protocol (GA June 2025): Access tools hosted on remote MCP endpoints for interoperable tool sharing. (What’s new in Foundry Agent Service - Updated: 2025-10-08)
  • Deep Research (GA June 2025): Multi-step web-based research with o3-deep-research model + Bing Search
  • Browser Automation (Preview): Real-world browser tasks via natural language with Playwright Workspaces
  • Computer Use (Preview): UI interaction via specialized computer-use-preview model, interprets raw pixel screenshots, virtual keyboard/mouse control
  • Image Generation (Preview): Generate and edit images as part of conversations and multi-step workflows

Agent Setup Options:

  • Basic Setup: Microsoft-managed search and storage (files stored in MS-managed storage, vector stores in MS-managed search). Fastest path to production; no customer infrastructure to manage.
  • Standard Setup: BYO Azure AI Search + Blob Storage + Cosmos DB (files in your Blob, vector stores in your AI Search, thread storage in your Cosmos DB), private networking, no public egress by default. Required for VNet-isolated deployments.

New in the Foundry (new) portal:

  • Responses API (GA): Modern API primitive replacing the Assistants API. Uses Conversations (not Threads) and Response Items (not Runs) with stateful context, background mode, and durable streams.
  • Current endpoints and identity: Current agents receive an endpoint and agent identity through the current model; the legacy Agent Applications publishing model is deprecated. Distribution to Microsoft 365 Copilot and Teams is Early Access Preview and must be validated per tool and identity path.
  • Voice Live (Preview): Real-time voice agents powered by Azure Speech. Connect Foundry agents to telephony, automotive, accessibility, and contact center scenarios via agent ID. Integrates natively with Foundry agents. SDKs for Python, C#, JavaScript, Java. Requires public endpoints (no VNet support yet).
  • Foundry IQ (Preview): Managed knowledge bases connecting agents to permission-aware enterprise data via MCP. See Foundry IQ.
  • Foundry Workflows: Retiring from Preview without a GA path on December 1, 2026. No new-solution recommendation.
  • Agent Memory (Preview): Persistent context across sessions for agents.

Construction Paths - Pick the Amount of Runtime You Own:

Not all agents are built the same way. Think of this as choosing between a furnished kitchen and bringing your own kitchen crew. The choice is ownership, not prestige.

  • Prompt agents (GA): Microsoft documents them for configuration-defined agents, including production agents that do not need custom orchestration logic. The managed model accelerates delivery while limiting runtime ownership: teams cannot add arbitrary orchestration code or define the hosting topology, and capacity remains bounded by service quotas plus model, tool, and regional availability. Feature maturity varies across tools, SDKs, protocols, and publishing paths. Framework guidance: favor prototypes, sandboxes, internal tools, and low-impact production. For most pro-code production agents that require customer-owned scaling, failover, rollback, deterministic middleware, observability, or evidenced RTO/RPO, use Agent Framework on Azure Container Apps or AKS. This is the framework’s risk posture, not a Microsoft support restriction. See Agent types and Agent Service limits, quotas, and regions.
  • Hosted agents (mixed maturity under a GA parent service): Bring containerized Python or C# code and custom orchestration. Choose this path when stronger per-session VM isolation is valuable and the documented envelope fits. Session allocation is not an identity-based container model, and Hosted Agents are not self-hosted applications on Azure Container Apps or AKS.

The Hosted Agent Constraint Card

Isolation is the reason to choose it; the envelope is the price of admission. Each session receives a VM-isolated sandbox. Session IDs—not user identities—drive allocation, so applications must map users or conversations to sessions.

Constraint Current documented envelope
Compute per session 0.5 vCPU/1 GiB, 1 vCPU/2 GiB, or 2 vCPU/4 GiB
Lifecycle Compute idles after 15 minutes; session state is deleted after 30 days of inactivity
Scale Scales per session with no replica or warm-pool control. In the BYO-VNet context, the documented ceiling is 50 concurrent sessions per subscription and region. Plan around roughly 200 agents per Foundry instance (resource). The 250-project resource limit is theoretical and workload-dependent; official guidance indicates effective capacity can fall to roughly 25 projects under heavy traffic. Plan below 80% subnet utilization.
Revisions Per agent, allow up to 100 active revisions and 1,000 total valid revisions; delete obsolete revisions before the cap blocks deployment.
Identity Each Hosted Agent gets a dedicated agent identity. External resources require explicit RBAC; user-invoked and background paths use different identity flows. Applications must map users or conversations to sessions.
Storage Up to 20 GiB per session at 1 vCPU or larger, scaled down for smaller tiers; about 20% is reserved. $HOME, uploaded files, the image, and other writable content share the remainder.
Networking prerequisites BYO-VNet requires customer Storage, AI Search, and Cosmos DB; a dedicated delegated agent subnet per Foundry resource; and a /24 recommended subnet. The Foundry resource and VNet must be in the same region. Projects created before June 25, 2026 require the container registry’s public endpoint.
Region and feature fit Hosted Agents must run in a supported region, and model, tool, protocol, and private-network support vary by region. Validate the current matrices together—not independently.
Cost Total cost includes model inference, tool usage, and container compute (CPU and memory) for active sessions. Per-session sizing multiplies compute cost with concurrency, and scale-to-zero does not remove cold-start or resumed-session planning.
Maturity The parent Agent Service is GA, but Hosted packages, adapters, protocols, tools, networking combinations, and Microsoft 365 publishing have mixed maturity. Pin versions and validate each surface.

Use Hosted Agents when that per-session isolation is worth the constraints. Otherwise, use Azure Container Apps or AKS for more scalable, customer-operated hosting today. See Hosted agents, Agent Service limits, quotas, and regions, Foundry resource and project limits, and BYO-VNet prerequisites.

Recent Updates (2025–2026):

  • Mar 2026: Next-gen Foundry Agent Service reached GA on the Responses API. Feature maturity still varies by agent type, protocol, tool, package, region, and channel; use current Learn tables rather than this announcement as the deployment snapshot.
  • General Availability: Service went GA in May 2025
  • A2A: Treat incoming endpoints as Preview and validate direction, authentication, and protocol support independently.
  • MCP tool: Connect to remote Model Context Protocol servers (June 2025)
  • Deep Research: o3-deep-research + Bing Search for multi-step analysis (June 2025)
  • Bing Custom Search: Specify websites for grounding (June 2025)
  • Azure Monitor integration: Metrics for file indexing, run tracking (April 2025)
  • BYO Cosmos DB: Thread storage in customer-managed Cosmos DB for NoSQL (April 2025)
  • VS Code extension: Develop, test, and publish agents with tool configuration inside Visual Studio Code. (Foundry Agent Service GA - Updated: 2026-01-21)

Network Isolation:

  • VNet Support (GA, Standard Setup): Full private networking with BYO VNet injection. Agent client injected into a customer-managed subnet; outbound traffic routes through your VNet to Azure PaaS over private endpoints. BYO VNet now extends to MCP servers, Azure AI Search, and Fabric data agents. Requires delegated subnet (Microsoft.App/environments, /27+) and BYO Storage, AI Search, Cosmos DB.
  • Managed VNet (Preview): Microsoft-provisioned network with managed private endpoints. Two modes: “Allow internet outbound” and “Allow only approved outbound.” Simpler setup; no customer VNet required.
  • Tool support behind VNet: MCP (private), AI Search, Code Interpreter, Function Calling, Bing/SharePoint Grounding, and Foundry IQ work behind VNet. File Search, OpenAPI, Azure Functions, Browser Automation, Computer Use, Image Generation, and A2A are not yet supported. Voice Live requires public endpoints.
  • Ideal for: Managed PaaS with private networking requirements. Use Standard Setup + BYO VNet for GA-supported production isolation.

Terminology clarification: This guide uses four distinct terms: (1) Microsoft Foundry is the platform and portal. (2) Foundry Agent Service is an optional managed PaaS within it. (3) Hosted Agents are containerized agents on that service with per-session VM isolation; they are not self-hosted applications on Container Apps or AKS. (4) Microsoft Agent Framework is the GA open-source orchestration SDK. Portal, service, agent type, framework, and feature labels do not inherit one another’s status.

When to use: Managed agent state, identity, tools, and runtime infrastructure when the exact agent type and feature statuses meet the workload’s production bar. Use Agent Framework for code-first orchestration and A2A only for direct delegation.

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Agent 365 {: .tech-heading }

Description: Governance layer that assigns each agent a Microsoft Entra Agent ID for identity, lifecycle, and access management, with centralized observability in the Microsoft 365 admin center. Official Docs: Agent 365 Status: GA (May 2026; $15/user/month standalone, bundled in M365 E7 at $99/user/month)

How it fits together:

  • Microsoft Entra Agent ID (Preview): Provides agent identities, blueprints, optional agent users, and policy enforcement across five pillars: Conditional Access (adaptive policies, Microsoft Managed Policies for high-risk agents), ID Governance (entitlement management, time-bound access), ID Protection (anomaly detection, risk-based remediation), Network Controls (prompt injection blocking, threat intelligence filtering), and Agent Identity Platform (auto-discovery, A2A/MCP authorization). (Microsoft Entra Agent ID - Updated: 2026-03-25; Agent identities - Retrieved: 2025-11-04)
  • Agent registry + admin center observability: Agent 365 surfaces agents in the Microsoft 365 admin center for inventory and management. (Overview of Microsoft Agent 365 - Retrieved: 2025-12-15)
  • Agent 365 SDK (Preview): Extends agents built on any SDK/platform with Entra-backed identity, notifications, OpenTelemetry observability, and governed MCP servers under blueprint policies. (Agent 365 SDK - Retrieved: 2026-01-09)
  • Agent 365 CLI (Preview): Cross-platform CLI to deploy and manage Agent 365 applications on Azure. Requires custom client app registration in Entra ID and uses --prerelease installs while the CLI evolves. (Agent 365 CLI - Retrieved: 2026-01-13)

Licensing and rollout: Agent 365 is GA with per-user licensing at $15/user/month. Agents acting on behalf of a licensed user are covered. Included in the M365 E7 bundle ($99/user/month). The Agent 365 SDK and CLI remain in Preview; plan for API surface changes in tooling workflows. (Overview of Microsoft Agent 365 - Retrieved: 2026-03-13)

When to use: Establish identity, registry, and governance for cross-platform agents while piloting early Agent 365 capabilities; pair with Copilot Studio or Microsoft Foundry runtimes for execution.

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Foundry Control Plane {: .tech-heading }

Description: Centralized registry and security posture hub for agents built in Microsoft Foundry. Integrates Azure Policy, Microsoft Defender, and Purview for unified governance. Official Docs: Foundry Control Plane Status: GA (Nov 2025)

Key Features:

  • Agent registry: Inventory agents with RBAC, tenant isolation, and managed identities for each agent app. (Overview - Updated: 2025-11-05)
  • Policy & guardrails: Apply Azure Policy, Defender for Cloud, and Purview data security policies to agent projects from one pane. (AI security what’s new - Updated: 2025-05-19)
  • Observability & remediation: Security and policy tabs with bulk remediation for misconfigurations, plus hooks for Azure Monitor. (Overview - Updated: 2025-11-05)

When to use: Govern Foundry-built agents at scale-register, secure, and monitor agents alongside Azure resource policies.

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Azure AI Search {: .tech-heading }

Description: Azure-native search and retrieval platform with vector, hybrid, and agentic retrieval (knowledge bases) for RAG and grounding. Official Docs: Azure AI Search Documentation Status: GA (agentic retrieval has mixed status: selected REST API features GA in 2026-04-01; portal and newer capabilities remain Preview). A consumption-based Serverless tier is in Public Preview alongside the dedicated tiers.

Key Features:

  • Serverless (consumption) tier (Public Preview): Pay only for compute (Compute Units per hour) and indexed storage (per GB per month), with scale-to-zero when idle, alongside the existing dedicated (provisioned) tiers. Ideal for variable, bursty, or unpredictable workloads. Billing is not enabled during preview (Microsoft gives at least 30 days’ notice before GA), available in select regions, and tier migration is not supported during preview. Advanced add-ons (semantic ranker, agentic retrieval, image extraction, skill execution) are billed separately. (Azure AI Search Serverless cost optimization - Updated: 2026-06)
  • Agentic retrieval / knowledge bases (mixed status): Selected programmatic REST API features reached GA in 2026-04-01, while Foundry portal, Azure portal, answer synthesis, multi-turn retrieval, and newer source types remain Preview. Foundry IQ lets Agent Service agents call knowledge bases through MCP. (Agentic retrieval overview - Updated: 2026-06-02; Foundry IQ overview - Updated: 2026-06-05)
  • Security & governance: SharePoint indexer ACL flow-through (Preview), sensitivity label enforcement, and confidential computing (GA, +~10% surcharge). (What’s new - Updated: 2026-03-13; Sep 2025)
  • Knowledge sources: Indexed/remote SharePoint, indexed OneLake, and web sources with content extraction powered by Azure AI Content Understanding. (What’s new - Updated: 2026-03-13)
  • Ranking & analytics: Semantic ranker and agentic retrieval available on free tier (limited quotas); scoring function aggregation and facet aggregations for analytics. (What’s new - Updated: 2026-03-13)
  • Endpoint flexibility: Skills/vectorizers accept services.ai.azure.com and azure-api.net endpoints for Foundry-hosted models. (What’s new - Updated: 2026-03-13)

When to use: Enterprise RAG/agentic retrieval with ACL-aware indexing, label-aware enforcement, and integration into Foundry/Agent Service.

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Foundry IQ {: .tech-heading }

Description: Managed knowledge layer within Microsoft Foundry that provides agents with permission-aware, citation-backed responses grounded in enterprise data. Foundry IQ creates configurable, multi-source knowledge bases that connect to Azure AI Search’s agentic retrieval engine via MCP endpoints. Official Docs: Foundry IQ overview Status: Mixed. Core knowledge source types and the 2026-04-01 REST API are GA; answer synthesis, multi-turn retrieval, non-minimal reasoning effort, portal experience, and additional source types remain Preview. Treat as Preview for production planning unless your workload uses only GA-surface features.

Key Features:

  • Knowledge bases as first-class assets: Group one or more knowledge sources under a single MCP endpoint with configurable retrieval instructions, reasoning effort, and output mode. Multiple agents can share the same knowledge base. (Foundry IQ overview - Retrieved: 2026-03-19)
  • Permission-aware retrieval: Synchronize ACLs for indexed sources and enforce Microsoft Purview sensitivity labels at query time. Run queries under the caller’s Microsoft Entra identity for end-to-end permission enforcement. (Foundry IQ overview - Retrieved: 2026-03-19)
  • Automated document processing: Auto-chunk documents, generate vector embeddings, extract metadata, and schedule incremental indexer runs for indexed knowledge sources (Azure Blob Storage, SharePoint, OneLake, existing search indexes). (Foundry IQ FAQ - Retrieved: 2026-03-19)
  • Remote knowledge sources: Query SharePoint via the Copilot Retrieval API and the web via Grounding with Bing without ingesting or storing data. (Foundry IQ FAQ - Retrieved: 2026-03-19)
  • Agentic retrieval engine: LLM-powered query planning decomposes user queries into subqueries, runs parallel searches across knowledge sources, applies semantic reranking, and returns extractive data with citations. (Foundry IQ overview - Retrieved: 2026-03-19)
  • MCP integration with Foundry Agent Service: Connect knowledge bases to agents via MCP tool calls. The knowledge_base_retrieve tool enables grounded responses in agent conversations. (Connect Foundry IQ to Foundry Agent Service - Retrieved: 2026-03-19)

Relationship to Microsoft IQ:

Microsoft provides four IQ capabilities for agent-native systems:

  • Foundry IQ: Enterprise knowledge (files, blobs, indexes, web). You are here.
  • Work IQ: Microsoft 365 collaboration context (emails, meetings, chats, documents). See Work IQ.
  • Fabric IQ: Business analytics (semantic models, ontologies, OneLake/Power BI).
  • Web IQ: Public web context and fresh external information. See Web IQ.

Each IQ capability is standalone, but they can work together to provide comprehensive organizational and external context for agents.

When to use: Custom agents needing governed, permission-aware access to enterprise documents, web content, or SharePoint, with citation-backed responses and ACL enforcement. Pair with Foundry Agent Service for managed agent orchestration.

When NOT to use: M365-only knowledge grounding (use Copilot connectors instead); analytics/semantic model queries (use Fabric IQ); simple document retrieval without permission enforcement (use Azure AI Search directly).

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Work IQ (Preview) {: .tech-heading }

Description: Work IQ is the intelligence layer that powers Microsoft 365 Copilot and can be used directly by custom agents and apps. It delivers chat, context, tools, and workspace capabilities through a single platform surface with built-in governance. Official Docs: Work IQ overview Status: Usage-based service model with endpoint access via MCP, REST API, and A2A

Key Features:

  • Unified endpoint model: Work IQ API endpoints include a remote MCP server, REST API, and A2A so the same intelligence layer can be consumed from Copilot Studio, custom apps, and agent-to-agent flows.
  • Compact tool surface: Work IQ MCP collapses large operation catalogs into a small set of generic tools that can retrieve and act across mail, calendar, files, people, chat, and sites.
  • Runtime data discovery: Agents can discover data structure at runtime through self-describing resource paths instead of relying on brittle, pre-modeled integrations.
  • Dataverse intelligence: Extends Work IQ to business data understanding. Define reusable business context (semantic models, organizational processes, data schemas) that agents use to understand what your data means, follow your organization’s procedures, and read/update Dataverse records reliably. Define it once, use it across all agents. (Dataverse intelligence - Retrieved: 2026-03-19)
  • Enterprise security and governance: Centralized authorization boundaries, Rego-based policy enforcement, user-scoped execution, auditability, usage analytics, and rate limiting are built into the platform.
  • Multi-platform integration: Use the same Work IQ endpoint from Copilot Studio (MCP), custom web/apps (REST), and agent meshes (A2A).
  • Work IQ CLI: Command-line interface and MCP server that bridges AI coding assistants (GitHub Copilot, VS Code, Claude Code) and M365 data. Query emails, meetings, documents, and Teams messages from the terminal. In MCP server mode, your coding assistant automatically pulls relevant workplace context when you’re implementing features discussed in recent meetings. Coding agent setup guides available for Claude Code and GitHub Copilot CLI. (Work IQ CLI - Retrieved: 2026-04-03)

When to use: Any agent that needs organizational context, not just document retrieval. Work IQ closes the gap between “what the content says” and “how work actually happened” across people, meetings, files, chats, and business systems. Use MCP for tool-based agent integration, REST for app integration, and A2A for agent collaboration.

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Web IQ (Limited Access) {: .tech-heading }

Description: The public web intelligence layer within the Microsoft IQ family. Where Work IQ gives agents organizational context and Foundry IQ gives them enterprise documents, Web IQ gives them fresh public web information. Think of it as the difference between a researcher who only reads internal memos and one who also scans the outside world. Official Docs: Microsoft IQ | Web IQ product page Status: Limited Access (enrollment required; no self-service provisioning)

Key Features:

  • Web-scale grounding: Agents use an agent-native web grounding surface for real-time public information.
  • Part of Microsoft IQ: Web IQ complements Work IQ (organizational context), Foundry IQ (enterprise knowledge), and Fabric IQ (analytics). Together they form the four IQ capabilities under the Microsoft IQ umbrella.

When to use: Agents that need current public information – news, regulations, product specs, research papers – alongside enterprise data. Pair with Foundry IQ or Work IQ so the agent can cross-reference public facts against internal context.

When NOT to use: Scenarios where all required data is internal (use Work IQ or Foundry IQ); analytics workloads (use Fabric IQ); workloads that cannot tolerate Limited Access enrollment gates.

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Azure AI Content Understanding {: .tech-heading }

Description: Multimodal AI service in Foundry Tools that extracts semantic content from documents, images, audio, and video files. Optimized for retrieval-augmented generation (RAG) and automated workflows with prebuilt and custom analyzers. Official Docs: Azure AI Content Understanding Status: GA (API version 2025-11-01; GA SDKs for Python, .NET, Java, JavaScript/TypeScript)

Key Features:

  • RAG analyzers: prebuilt-documentSearch (PDF, Office, images with layout preservation), prebuilt-videoSearch (visual frames + audio transcription), prebuilt-audioSearch (speaker diarization, multilingual), prebuilt-imageSearch (visual content descriptions). All return markdown + summaries optimized for search indexing. (Content Understanding what’s-new - Retrieved: 2026-03-19)
  • Domain-specific prebuilts: Finance and tax (invoices, receipts, W-2s, 1099s), identity documents (passports, driver’s licenses), procurement and contracts, mortgage and lending, utilities. (Content Understanding prebuilt analyzers - Retrieved: 2026-03-19)
  • Custom analyzers: Extend base analyzers with custom field schemas, training examples, and configurations for specialized extraction scenarios across all four modalities. (Content Understanding overview - Retrieved: 2026-03-19)
  • Cross-region BYOC: Bring Your Own Capacity now supports cross-regional model deployments, letting you use any Azure OpenAI deployments regardless of resource or region. (Content Understanding what’s-new March 2026 - Retrieved: 2026-03-19)
  • GA SDKs: Python (azure-ai-contentunderstanding), .NET (Azure.AI.ContentUnderstanding), Java, and JavaScript/TypeScript, all targeting the 2025-11-01 GA API version with strongly-typed models and Azure SDK design guidelines. (Content Understanding what’s-new March 2026 - Retrieved: 2026-03-19)

Recent Updates (2026):

  • Mar 2026: GA SDKs across four languages, cross-region BYOC, larger analyzers for complex documents, nested schema depth raised to 7, RAG analyzers in Discover tab, GPT-4.1-mini model selection in Studio, .txt input support. (Content Understanding what’s-new - Retrieved: 2026-03-19)
  • Jan 2026: Read and Layout models available in Foundry (new) portal without requiring LLM configuration. (Content Understanding what’s-new - Retrieved: 2026-03-19)

When to use: Multimodal document processing for RAG pipelines, form extraction for finance/tax/procurement, video/audio content indexing for knowledge bases. Pair with Azure AI Search for indexing extracted content into searchable indexes.

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AI Builder {: .tech-heading }

Description: Power Platform AI services for document processing, vision, text analysis, and predictions. Backed by Azure AI Document Intelligence and GPT models. Callable from Copilot Studio agents, Power Automate, and Power Apps. Official Docs: AI Builder Documentation Status: GA

Key Features:

Data & Analytics Platforms {: .no_toc }

Microsoft Fabric {: .tech-heading }

Description: Unified data and analytics platform that provides the “OneLake” foundation for AI. Includes Real-Time Intelligence, Data Engineering, and the new “Fabric Data Agents” for conversational analytics. Official Docs: Microsoft Fabric Documentation Status: GA

Key Features:

  • Fabric Data Agents (Preview): Q&A-style conversational agents that retrieve insights from OneLake sources while respecting data access permissions; consumable by Copilot Studio and M365 Copilot. Not an orchestrator-use Foundry Agent Service or Agent Framework for multi-step coordination.
  • Rayfin (Preview): Open-source SDK and CLI for defining and deploying a managed application backend on Microsoft Fabric. Developers or coding agents can describe databases, business logic, APIs, identity, and access policies in code while app data lands in OneLake under Fabric governance.
  • Cosmos DB in Fabric (Preview): Deploy Cosmos DB (NoSQL) directly within Fabric for unified operational and analytical data without ETL.
  • OneLake Shortcut Transformations (Preview): Apply AI transformations (summarize, translate, classify) via Microsoft Foundry (Azure) during data ingestion.
  • Translytical Task Flows (Preview): Trigger write-back actions and workflows directly from Power BI reports.
  • Digital Twin Builder (Preview): No-code tool in Real-Time Intelligence to map physical assets to digital twins.

When to use Rayfin: Building AI-enabled or analytics-driven applications where the app backend should live close to governed Fabric data. Rayfin belongs in the “AI as a Product or Feature” bucket, and it also matters to “AI for Your Codebase” because coding agents can generate backend definitions that Fabric deploys and governs.

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Local and Edge AI {: .no_toc }

Not every inference call should travel to the cloud. Latency-sensitive, offline-capable, or data-sovereignty-constrained workloads need models that run where the data lives. Think of cloud AI as the power grid and local AI as a generator: you want the grid for scale, but the generator keeps the lights on when the connection drops.

Foundry Local {: .tech-heading }

Description: A component of Windows AI Foundry that brings Microsoft Foundry (Azure) models and capabilities to local devices (Windows 11, macOS), enabling offline inferencing, low-latency scenarios, and hybrid cloud/edge architectures. Models downloaded once, run locally with the same API surface as cloud Foundry. Official Docs: Foundry Local overview Status: Availability varies by model and platform. Validate current Learn documentation before production use.

Key Features:

  • Cloud-parity API: Same REST and SDK surface as Microsoft Foundry (Azure), so code migrates between local and cloud with a config change.
  • Hybrid deployment: Run models locally for latency or compliance, then use cloud Foundry for workloads that need larger models or elastic scale.
  • Model catalog subset: Supports a curated set of SLMs (Phi family, Mistral, others) optimized for device-class hardware.

Foundry Local on Azure Local (Preview) {: .tech-heading }

Description: Edge deployment option for running selected Foundry Local capabilities in customer-controlled Azure Local environments. It is relevant when the boundary is not just a device, but a branch, lab, factory, or disconnected site. Official Docs: Foundry Local on Azure Local Status: Preview

When to use: Sovereign, disconnected, or edge workloads where inference must stay in a customer-controlled environment but still needs centralized platform operations. Also relevant for latency-critical inferencing, air-gapped environments, or data residency constraints that prohibit cloud egress.

Windows AI APIs and Windows ML {: .tech-heading }

Description: Platform-level AI primitives built into Windows 11 for on-device inference. Windows AI APIs provide high-level access to system models (text, image, speech) without managing runtimes. Windows ML provides the lower-level ONNX Runtime integration for custom models. Official Docs: Windows AI overview Status: GA (Windows AI APIs); GA (Windows ML / ONNX Runtime)

Key Features:

  • Windows AI APIs: Pre-built capabilities for text intelligence, image generation, and OCR that run entirely on-device using the system’s NPU, GPU, or CPU.
  • Windows ML: Load and run custom ONNX models on DirectML-accelerated hardware. Useful for specialized vision, NLP, or sensor-fusion models.
  • NPU acceleration: Both API layers take advantage of Neural Processing Units on Copilot+ PCs for power-efficient inference.

When to use: Client-side intelligence in Windows apps (real-time captions, local document summarization, image classification) where round-tripping to a cloud endpoint adds unacceptable latency or cost.

Microsoft Execution Containers (MXC) (Early Preview) {: .tech-heading }

Description: Policy-driven local containment for agent tools and code execution. MXC lets a host describe what an agent can access, then relies on operating-system primitives to enforce those boundaries. Official Docs: Windows platform security for AI agents Status: Early Preview

When to use: Emerging local-agent scenarios where tool execution must be contained on the user’s machine. Treat it as a design signal, not a production security boundary, until Microsoft Learn publishes stable guidance.

Developer Tools {: .no_toc }

GitHub Copilot {: .tech-heading }

Description: AI-powered developer platform that has evolved from an in-editor assistant to a suite of autonomous agents and tools for the entire software lifecycle. Official Docs: GitHub Copilot Documentation Status: GA (Various features in Preview)

Key Features:

  • GitHub Copilot cloud agent: Available for paid Copilot plans. Works asynchronously in a GitHub Actions-powered environment to research a repository, create a plan, change one branch, and optionally open one pull request per task; related capabilities retain their own feature-level statuses.
  • GitHub Copilot app: Desktop application available for all Copilot plans. Manages parallel isolated sessions in local repositories, worktrees, or cloud sandboxes (Public Preview), with Interactive/Plan/Autopilot modes, model and reasoning selection, issue/PR workflows, diff review, Agent Merge, steering, archiving, and canvases. GitHub Copilot app
  • GitHub Copilot Modernization: Solution collection delivered through IDE extensions and the Modernize CLI. IDE language/framework/tool upgrades are GA for .NET, Java, and C++; IDE Azure migration is GA for .NET and Java; the Modernization agent CLI is Public Preview. Modernization overview
  • Copilot Agent Mode (Preview): “Peer programmer” mode in VS Code that can edit multiple files, run terminal commands, and self-heal errors during development.
  • Copilot Extensions: Ecosystem of third-party tools (DataStax, Sentry, Azure) that Copilot can invoke to perform specialized tasks.
  • Copilot Workspace: Natural language environment to plan, build, test, and run code in a cloud-based dev environment.

GitHub Models {: .tech-heading }

Description: Models as a Service (MaaS) platform integrated directly into GitHub, allowing developers to discover, test, and compare models (OpenAI, Meta, Mistral, Microsoft) without leaving their workflow. Official Docs: GitHub Models Documentation Status: Preview

Key Features:

  • Model Playground: Interactive hub to test prompts and compare model outputs.
  • Workflow Integration: Use models directly in PRs, issues, and CI/CD pipelines.
  • Prompt Management: Create, save, and share prompts across the organization.
  • Evaluation: Automated tools to evaluate model performance and cost for specific use cases.

Visual Studio Code {: .tech-heading }

Description: The world’s most popular code editor, now serving as the primary interface for “Agentic IDE” experiences. Official Docs: VS Code Documentation Status: GA

Key Features:

  • Agent Mode: The UI for autonomous coding agents (see GitHub Copilot).
  • PostgreSQL Extension (Preview): AI-powered database management with natural language to SQL capabilities.
  • Microsoft Foundry extension: Build, test, and deploy agents directly from VS Code.

Microsoft 365 Agents SDK & Toolkit {: .tech-heading }

Description: Pro-code framework and tooling for multi-channel Microsoft 365 agents. Combines the Agents SDK (C#, JavaScript/TypeScript, Python) with Agents Toolkit extensions for VS Code, Visual Studio, GitHub Copilot, and CLI-based automation. Successor to Bot Framework for custom engine agents. Status: GA (C#, JavaScript/TypeScript, Python) Official Docs: Create and deploy with M365 Agents SDK | M365 Agents Toolkit | Bot Framework Migration

Key Features:

  • Channel reach: Deploy custom engine agents to Microsoft 365 Copilot, Teams (chat, channels, meetings), web, email, SMS, and third-party messaging channels. (Microsoft 365 Agents Toolkit - Updated: 2026-01-29)
  • Model + orchestrator choice: Bring Azure OpenAI, Microsoft Foundry (Azure), Anthropic, or other APIs and pair with Microsoft Agent Framework or alternate orchestrators. (Create and deploy with Microsoft 365 Agents SDK - Updated: 2025-12-02)
  • Toolkit formats: Use VS Code, Visual Studio, GitHub Copilot, or CLI tooling for scaffolding, debugging, publishing, and CI/CD automation. (Microsoft 365 Agents Toolkit - Updated: 2026-01-29)
  • Agents Playground: Local sandbox simulates Teams to iterate without a tenant or tunneling, supporting rapid agent debugging. (Microsoft 365 Agents Toolkit - Updated: 2026-01-29)
  • Migration path: Bot Framework retirement on Dec 31, 2025, routes existing solutions to the Agents SDK + Toolkit stack. (Bot Framework Migration Guide)

Recent Updates (2025):

Deployment & Hosting:

  • Bring-your-own hosting: Deploy Agents SDK workloads to Azure App Service, Azure Container Apps, AKS, or on-premises infrastructure with full control over VNets, private endpoints, and certificates. (Microsoft 365 Agents Toolkit - Updated: 2026-01-29)
  • CI/CD automation: Agents Toolkit CLI supports provisioning, packaging, and publishing inside GitHub or Azure DevOps pipelines. (Microsoft 365 Agents Toolkit command line interface - Retrieved: 2025-05-19)

When to use: Migrating Bot Framework bots, building enterprise-grade agents that must span Teams, Copilot, and external channels, or needing full governance over hosting, authentication, and orchestration stack selection.

Sources:

Agent Governance Toolkit (Public Preview) {: .tech-heading }

Runtime policy and fleet governance are complementary layers. A fleet control plane inventories agents; application middleware can stop unsafe tool calls during execution. Deploy each layer when its responsibility is required.

Description: Microsoft-origin, MIT-licensed open-source middleware for runtime agent governance. It is not Microsoft Agent 365, Agent Registry, Foundry Control Plane, or a managed Azure service. Status: Public Preview across all formal releases; zero GA features Release snapshot: v4.1.0 is the latest formal release (June 9, 2026). Main-branch v5 work is unreleased and must not be treated as a supported version. Official Sources: Microsoft Open Source announcement | GitHub repository | Changelog

What it does: Adds application-layer policy checks, audit hooks, and runtime controls around agent execution. The Agent Control Specification (ACS) policy layer is beta within this Public Preview project.

What it does not do: It does not provide a managed service, SLA, Microsoft product support contract, fleet inventory, identity governance, or a guarantee of API stability. Preview APIs and configuration schemas can change; pin a formal release, test upgrades, and own operations like any other OSS middleware.

When to use: Add it when a code-owned agent needs in-process enforcement that platform and fleet controls do not provide. Compose it with managed identity, registry, policy, monitoring, and evaluation layers rather than comparing those layers as rivals. See the layering guide.

Microsoft Agent Framework {: .tech-heading }

Description: Open-source orchestration SDK for composing agents and workflows with executors, edges, middleware, and reusable patterns across .NET and Python. Status: GA since April 2, 2026. Snapshot as of July 13, 2026: stable .NET 1.13.0 and Python 1.11.0; extensions and integrations can carry independent Preview labels. Official Docs: Microsoft Agent Framework overview | Workflows overview | Workflows - Checkpoints Packages: NuGet: Microsoft.Agents.AI (stable 1.13.0 snapshot) | PyPI: agent-framework (stable 1.11.0 snapshot) GitHub: microsoft/agent-framework

Key Features:

  • Unified agents + workflows: Ship LLM-powered agents, MCP integrations, and workflow graphs from a single SDK that merges Semantic Kernel and AutoGen strengths. (Microsoft Agent Framework overview - Retrieved: 2026-02-20)
  • Orchestration patterns: Sequential, Concurrent, Handoff, and Magentic orchestrations accelerate multi-agent collaboration without bespoke control logic. (Workflows orchestrations overview - Retrieved: 2026-02-13)
  • Type-safe execution + checkpointing: Executors, edges, and checkpoint services provide deterministic routing, resumability, and human-approval loops. (Workflows overview - Retrieved: 2026-02-13; Workflows - Checkpoints - Updated: 2026-03-11)
  • Observability instrumentation: OpenTelemetry hooks capture workflow spans (workflow.run, message.send, etc.) via ENABLE_OTEL or setup_observability(). (Workflows - Observability - Retrieved: 2026-02-13)
  • Workflows as agents: Any workflow can be wrapped and exposed through the agent interface, enabling reuse across APIs or UI hosts. (Workflows - Using workflows as agents - Retrieved: 2026-02-13)
  • Agent Skills: Portable packages of instructions, scripts, and resources that give agents specialized capabilities. Skills use progressive disclosure (advertise ~100 tokens → load <5000 tokens → read resources on demand) to minimize context window usage. (Agent Skills - Retrieved: 2026-03-19)
  • Background responses: Continuation token mechanism for long-running operations. Agents start processing in the background and return a token for polling or stream resumption. Currently supported by OpenAI Responses API-backed agents. (Background Responses - Retrieved: 2026-03-19)
  • Evaluation guidance: Foundry-hosted evaluation support for Agent Framework agents covering IntentResolution, ToolCallAccuracy, TaskAdherence, Relevance, and Groundedness metrics. (Agent evaluation checklist - Retrieved: 2026-03-19)
  • Service Connectors: First-party connectors for Microsoft Foundry, Azure OpenAI, OpenAI, Anthropic Claude, Amazon Bedrock, Google Gemini, and Ollama. (Agent Framework v1.0 blog - Published: 2026-04-03)
  • Middleware Hooks: Intercept, transform, and extend agent behavior (content safety, logging, compliance) without modifying prompts. (Agent Framework v1.0 blog - Published: 2026-04-03)
  • Agent Memory & Context Providers: Pluggable memory via Foundry Agent Service Memory, Mem0, Redis, Neo4j, or custom stores. (Agent Framework v1.0 blog - Published: 2026-04-03)
  • YAML-defined agents and workflows: Define agents and orchestration topology in version-controlled YAML. (Agent Framework v1.0 blog - Published: 2026-04-03)
  • MCP support (GA): Dynamic discovery and invocation of tools via MCP-compliant servers; A2A protocol support coming soon. (Agent Framework v1.0 blog - Published: 2026-04-03)
  • Migration Assistants: Automated migration from Semantic Kernel and AutoGen with step-by-step guides. (Agent Framework v1.0 blog - Published: 2026-04-03)

Preview Features:

  • DevUI (Preview): Browser-based local debugger for agent execution visualization.
  • Foundry Hosted Agent Integration (Preview): Run Agent Framework agents as managed services on Foundry or Azure Durable Functions.
  • AG-UI / CopilotKit / ChatKit (Preview): Stream agent output to frontend surfaces.
  • Skills (Preview): Reusable domain capability packages.
  • GitHub Copilot SDK + Claude Code SDK (Preview): Use as agent harnesses in orchestrations.
  • Agent Harness (Preview): Shell, filesystem, and messaging loop access for coding agents.

When to use: Full code-first control over multi-agent orchestration with multi-provider model support, custom middleware, and workflow persistence. Use when Copilot Studio’s low-code approach or Foundry Agent Service’s managed runtime don’t provide enough flexibility.

Recent Updates (2026):

  • Apr 2, 2026: Framework core reached GA for .NET and Python. Treat the framework as a house with rooms: the core can be GA while integrations such as Hosted Agent adapters, AG-UI, Skills, and harnesses remain Preview.

Sources:

Agent Runtime Alternatives (Preview) {: .no_toc }

Beyond Foundry Agent Service and self-hosted containers, Microsoft has introduced several specialized runtimes for agent workloads. Each trades off isolation, scale model, and operational overhead differently.

Runtime Status What It Does Best For
Azure Container Apps Sandboxes Public Preview Stateful sandbox groups for isolating agent-generated or user-provided code. Agents that need persistent but contained execution workspaces
Azure Functions Serverless Agents Runtime Preview Event-driven, consumption-billed hosting for lightweight agents using Functions triggers and stateful orchestration. Cost-sensitive agents with bursty or event-driven traffic
Azure Connector Namespace Public Preview Managed connector surface that exposes Logic Apps connectors as MCP servers for agent runtimes. Agents needing enterprise system integration without custom adapters
API Management Unified Model API Preview OpenAI-compatible gateway that routes to multiple model providers behind central policies. Teams standardizing auth, quotas, model aliases, and governance across providers

Verify before committing: These runtimes are in Preview with evolving APIs and no production SLA. Check Microsoft Learn for current status before designing production architectures around them.

Technology Selection Quick Guide

Your Need Recommended Technology Why?
End-user productivity (no dev) Microsoft 365 Copilot Built-in, tenant-aware, immediate value
Custom agents (low-code) Copilot Studio Managed platform, fast deployment, governance
Custom agents (pro-code) M365 Agents SDK or Microsoft Foundry (Azure) Full control, any model, any orchestrator
Managed custom-code runtime Hosted Agents (mixed maturity) Use only when per-session VM isolation is valuable and the complete constraint card fits; otherwise use Azure Container Apps or AKS
Direct agent delegation Incoming Foundry A2A endpoint (Preview) Lightweight delegation, not deterministic workflow orchestration
Enterprise workflow + AI Azure Logic Apps 1,400+ connectors, MCP server, AI agent workflows
Document processing AI Builder Prebuilt models, Power Platform integration
Deterministic code-first orchestration Microsoft Agent Framework (GA core) Checkpointing, type-safe workflows, and explicit multi-agent routing

Network Isolation Decision Matrix

Technology VNet Support Private Endpoints Managed VNet Disconnected Managed Service? Best For
Microsoft Foundry (Azure) Documented BYO VNet patterns Yes, feature-dependent Preview surfaces exist No Connected managed workloads needing private network isolation
Foundry Agent Service Setup, tool, and agent-type dependent Supported with prerequisites Preview surfaces exist No Managed agent capabilities with validated private-network support
Copilot Studio Gateway-based Via VNet data gateway No No Managed SaaS with governed resource access
M365 Agents SDK Inherits customer host Customer-managed Inherits customer host Host-dependent Custom network control
M365 Copilot Service-managed No customer VNet No No Managed SaaS only

Private endpoints and no-public-egress controls are not evidence of an air-gapped managed service. Use Foundry Local or Azure Local for separately documented disconnected patterns.

Identity & Permissions Architecture {: .tech-heading }

Why it matters: Successful agent deployments hinge on getting identity, authorization, and auditing right. Use this section to align authentication models with the platforms in this guide.

Implementation Approach {: .no_toc }

  1. Map identity boundaries for every surface (M365 Copilot, Copilot Studio, Microsoft Foundry (Azure), Agents SDK) so you know which services are inherently user-scoped and which require custom design.1234
  2. Choose delegated vs application scopes early, preferring delegated consent for user-driven actions and reserving service principals for automation that cannot run under a user identity.56
  3. Configure authentication flows using the native controls for each platform-Copilot Studio manual auth, Microsoft Foundry (Azure) managed identities, and MSAL providers in the Agents SDK.278
  4. Enforce least privilege and RBAC by assigning the minimum Entra ID roles, Graph scopes, and project-level permissions required for the workload; document any elevated service accounts.36
  5. Enable centralized auditing in Microsoft Purview and Dataverse so prompts, responses, and service-account executions are captured for compliance reviews.910

Identity & Permissions Matrix {: .no_toc }

Technology Default Identity Mode Service Accounts Supported? Primary Configuration Controls Audit Surface
M365 Copilot Always runs as the signed-in user No Tenant privacy & data access posture Microsoft Purview audit logs9
Copilot Studio User or service account depending on authentication setting Yes (manual auth) Agent authentication mode + connection references Microsoft Purview + Dataverse transcripts210
Microsoft Foundry (Azure) / Agent Service Configurable (API key, Entra ID, managed identity) Yes Azure RBAC assignments + managed identity role bindings Azure Monitor / Diagnostic logs
M365 Agents SDK Developer-defined (delegated, app-only, managed identity) Yes MSAL profile configuration + Graph scopes Custom logging + Purview via channel integration85

Microsoft 365 Copilot: User-Scoped by Design {: .no_toc }

  • Runs entirely under the requesting user’s identity and respects existing SharePoint, Exchange, and Teams permissions-“it only sees what you can see” is an architectural guarantee.1
  • Governance note: Anthropic models (used by Frontier features, WXP Agents, and Copilot Cowork) are excluded from EU Data Boundary and in-country processing commitments. Factor this into compliance assessments for regulated EU workloads.1
  • All prompts and responses flow into Microsoft Purview audit logs and activity explorer, enabling retention and eDiscovery without extra configuration.9
  • Best choice when compliance teams require individual attribution with zero additional setup.

Copilot Studio: Configurable Delegated or Service Accounts {: .no_toc }

  • Makers select Authenticate with Microsoft for delegated access (Teams channel only) or Authenticate manually to wire up Entra ID, federated credentials, or other OAuth providers.2
  • Connection references decide whether each action uses the caller’s identity or a pre-authorized service account-document every elevated credential and pair destructive flows with approvals.2
  • Purview auditing of maker and end-user interactions is GA (Jan 2025), and Dataverse conversation tables retain transcripts for 30+ days with configurable retention, giving you a complete audit trail.10
  • Ideal when you need to mix user-scoped reads with selective elevation for enterprise systems (for example, HR ticket creation under a bot account).

Microsoft Foundry (Azure) & Foundry Agent Service: RBAC + Managed Identity First {: .no_toc }

  • Replace static API keys with Microsoft Entra authentication and assign built-in roles (Azure AI User, Azure AI Project Manager, Cognitive Services OpenAI User) to enforce least privilege.3
  • Grant the Hosted Agent’s dedicated agent identity scoped access to downstream resources; the project managed identity serves platform infrastructure operations and is not the agent’s runtime identity.7
  • Use role assignments and diagnostic logging to trace every inference or tool call back to a user principal or managed identity-required for production-grade workloads.
  • Suits pro-code teams that already operate Azure landing zones and need fine-grained control.

Microsoft 365 Agents SDK: Bring Your Own Authentication {: .no_toc }

  • The SDK ships MSAL-based providers that can issue access tokens via delegated consent, client credentials, or managed identities; profiles are defined in configuration, not hard-coded.8
  • Pair the SDK with Entra ID app registrations that request only the Graph scopes you need, and use the Admin Center’s Permissions tab to review delegated vs application grants.56
  • Implement custom logging (Application Insights, Purview activity events) to record the initiating user, token type, and downstream actions-security teams will expect this evidence.
  • Choose this path when you require full control over token exchange, multi-channel adapters, and integration with existing identity middleware.

Next: Feature Comparison - Side-by-side capability matrices

  1. Data, privacy, and security for Microsoft 365 Copilot, Microsoft Learn. Retrieved: 2026-03-09. https://learn.microsoft.com/en-us/copilot/microsoft-365/microsoft-365-copilot-privacy ↩ ↩2 ↩3

  2. Configure user authentication in Copilot Studio, Microsoft Learn. Retrieved: 2025-11-25. https://learn.microsoft.com/en-us/microsoft-copilot-studio/configuration-end-user-authentication ↩ ↩2 ↩3 ↩4 ↩5

  3. Role-based access control for Microsoft Foundry (Azure) (hub-focused), Microsoft Learn. Retrieved: 2025-12-31. https://learn.microsoft.com/en-us/azure/ai-foundry/concepts/hub-rbac-azure-ai-foundry ↩ ↩2 ↩3

  4. Configure authentication in a .NET agent (Microsoft 365 Agents SDK), Microsoft Learn. Retrieved: 2025-07-17. https://learn.microsoft.com/en-us/microsoft-365/agents-sdk/microsoft-authentication-library-configuration-options ↩

  5. Manage permissions for Microsoft 365 Copilot agents, Microsoft Learn. Retrieved: 2026-01-23. https://learn.microsoft.com/en-us/microsoft-365/admin/manage/manage-agents-permissions ↩ ↩2 ↩3

  6. Overview of Microsoft Graph permissions, Microsoft Learn. Retrieved: 2025-12-26. https://learn.microsoft.com/en-us/graph/permissions-overview ↩ ↩2 ↩3

  7. How to use Foundry Agent Service with OpenAPI specified tools - Authenticating with managed identity, Microsoft Learn. Retrieved: 2025-12-22. https://learn.microsoft.com/en-us/azure/ai-foundry/agents/how-to/tools/openapi-spec#authenticating-with-managed-identity-microsoft-entra-id ↩ ↩2

  8. Configure authentication in a .NET agent (Microsoft 365 Agents SDK), Microsoft Learn. Retrieved: 2025-07-17. https://learn.microsoft.com/en-us/microsoft-365/agents-sdk/microsoft-authentication-library-configuration-options ↩ ↩2 ↩3

  9. Microsoft 365 Copilot reporting options for admins, Microsoft Learn. Retrieved: 2025-09-16. https://learn.microsoft.com/en-us/copilot/microsoft-365/microsoft-365-copilot-reports-for-admins ↩ ↩2 ↩3

  10. Audit Copilot Studio activities in Microsoft Purview, Microsoft Learn. Retrieved: 2026-01-27. https://learn.microsoft.com/en-us/microsoft-copilot-studio/admin-logging-copilot-studio ↩ ↩2 ↩3

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