Microsoft has made multiple announcements about Copilot this week: xAI Grok is making its entry into Word, Excel and PowerPoint via the Microsoft Frontier program, Copilot federated connectors based on the Model Context Protocol (MCP) are moving to general availability, and native application creation is arriving in Copilot Studio and Copilot Cowork. In parallel, the September 2026 Patch Tuesday fixes a critical vulnerability in Copilot Studio, and the end of the grace period for GitHub Copilot credits, effective since September 1st, substantially reduces the included allocations. This overview addresses Microsoft 365 administrators and IT decision-makers who must balance AI model choices, connector governance, usage costs and security.
Grok joins Microsoft 365 Copilot via the Frontier program
Microsoft officially added xAI's Grok models to Microsoft 365 Copilot on September 12th. Grok is now selectable as a model in Word, Excel and PowerPoint, as part of the Microsoft Frontier Program. The integration was announced by Satya Nadella, and confirmed on X by Elon Musk.
Administrative control remains central: Grok is disabled by default. Administrators must explicitly enable the SpaceXAI models in Copilot settings, under "AI providers for other large language models". Geographic restrictions also apply — Grok is not available to Frontier customers in the EU, EFTA or the United Kingdom during the preview phase. SpaceXAI has been added to Microsoft's Online Services Subprocessor List, and administrators retain control over data processed by Grok models. Microsoft has not specified which version of Grok powers the Office preview, although Grok 4.6 is xAI's most recent frontier model (August 2026).
The multi-model landscape at Microsoft has become substantial: Grok has been available in Azure AI Foundry since September 2025, in Copilot Studio since February 2026, and in GitHub Copilot since August 14th, 2026. With GPT-6 Astra (September 4th) and Claude Fable 5.1 (September 1st) also active on Copilot surfaces, Microsoft now simultaneously offers three frontier model families.
Federated Copilot MCP connectors reach general availability
Federated Copilot connectors reached general availability in September 2026, a significant milestone for the Model Context Protocol within Microsoft 365.
The key property of these connectors: no indexing or storage. Copilot connects to third-party data sources via MCP and retrieves data in real time, with the user's identity. Data never transits through Microsoft services — a significant differentiator in terms of privacy and compliance. Authentication relies on OAuth 2.0 and respects permissions from the source. The protocol is read-only: agents can search and retrieve content, but cannot write to source systems.
Supported surfaces at GA are the Researcher agent, Microsoft 365 Chat and Agent mode in Excel. Administrators manage connectors via the M365 admin center, under Copilot → Connectors, where federated connectors published by Microsoft appear with "Ready" status. Twelve Microsoft first-party MCP servers are included in the default environment group, all authenticated via Entra ID (with the exception of the public Microsoft Learn Docs MCP server). Availability covers worldwide multi-tenant, GCC, GCC High and DoD.
New connectors arrived this month, covering multiple sectors:
- Legal: iManage Work, Boardwise, Harvey, Descrybe, Relativity, Everlaw
- Financial: Mercury, Xero, FactSet, PitchBook, Morningstar
- Professional services: Asana, Notion, Canva, Linear, Dropbox
- Energy: S&P Global Energy
Additionally, self-service sync connectors are moving to public preview. Individual users can connect Jira Cloud and Confluence Cloud with their own credentials, without going through an IT ticket. Content is explored in Microsoft Graph on a per-user basis, not at the organizational level. General availability is targeted for October 2026.
Building native applications in Copilot Studio and Copilot Cowork
Microsoft added native application creation capabilities to Copilot Studio and Copilot Cowork this week — arguably the most structuring update of the quarter for Copilot Studio.
The principle: a creator describes a business objective in natural language — users, data and required actions. Copilot generates a functional first draft, which the user refines, previews, tests and publishes. Applications leverage connectors and Work IQ, follow Entra identity and connector policies, and published applications appear in the M365 admin center inventory.
Billing follows the Copilot Credits usage model, both for application creation and execution. Applications built in Copilot Cowork can be opened and edited in Copilot Studio — intentional interoperability. Application creation preview in Copilot Cowork began on September 8th (Frontier program), while the "App (Preview)" feature in Copilot Studio is being rolled out to public preview the week of September 10th.
The rest of the roadmap includes an "app-first" agent creation experience targeted for October 2026, and rendering of interactive MCP applications (sortable tables, drill-downs directly in conversations) targeted for November 2026.
September Patch Tuesday: critical CVE in Copilot Studio
The September 2026 Patch Tuesday fixed 966 vulnerabilities, including two actively exploited zero-days and 105 critical flaws. For the first time, Copilot-specific CVEs appear with notable severity.
CVE-2026-80098 — Copilot Studio, critical
Privilege elevation via incorrect cryptographic signature verification. CVSS score between 9.3 and 9.9. An unauthenticated attacker could remotely exploit this vulnerability over the network. Microsoft indicates that the vulnerability has been mitigated server-side and that no client action is required — but this is the first critical CVE specifically targeting Copilot Studio infrastructure.
Two other CVEs affect GitHub Copilot and VS Code, both with "Important" severity: CVE-2026-81380, an information disclosure, and CVE-2026-81381 (CVSS 6.5), related to insufficiently protected credentials on the network. Both affect the GitHub Copilot extension running in VS Code.
The same Patch Tuesday also revealed privilege elevation CVEs in Microsoft Fabric, Azure AD B2C and Azure AI Language. The trend is clear: as Microsoft's AI infrastructure expands, the attack surface grows proportionally.
End of GitHub Copilot credits grace period
The grace period for GitHub Copilot "harness" agents and workflows ended on September 1st, 2026. These agents now consume Copilot Credits under usage-based billing — and included allocations have decreased sharply.
| Offering | Credits before (transitional) | Credits after (standard) | Change |
|---|---|---|---|
| GitHub Copilot Business | 3,000 | 1,900 | -37% |
| GitHub Copilot Enterprise | 7,000 | 3,900 | -44% |
Credits are non-rollover: unused credits are lost each month. One AI credit equals $0.01. In Copilot Studio, credit counters stack: a generative response costs 2 credits, an agent action 5 credits, anchoring to the tenant graph 10 credits. When multiple counters combine — for example tenant graph anchoring plus a generative response — the total cost reaches 12 credits. Reasoning models add 10 credits per 1,000 tokens, in addition to the feature rate.
Services now billed via Copilot Credits include Copilot Studio agents, Copilot Cowork runtime, Work IQ API calls, agent workflows and native application creation. Cost management is available in Copilot > Cost Management in the M365 admin center: monthly limits per user and per policy, threshold notifications. Users can check an estimate of their consumption via the /cost command in Copilot Cowork.
URL migrations: anticipating network changes
Two ongoing URL changes require updates to network and security configuration.
Network deadline to monitor
Since early September 2026, m365.cloud.microsoft redirects to copilot.cloud.microsoft for organizations where access is available; remaining organizations will follow in early October. The domain remains in *.cloud.microsoft, preserving security, compliance and allowlist properties. However, firewall rules, proxy configurations, conditional access policies and URL filtering rules must be updated.
Teams Web is also migrating to teams.cloud.microsoft, with redirect completion expected in early October 2026. The deadline to confirm compatibility was September 10th — if your organization missed this deadline, you must contact your Microsoft account representative before the window closes. Limited exceptions remain possible until December 31st, 2026.
What this concretely changes for administrators
- AI Models: verify AI provider settings in the M365 admin center and decide whether Grok's data processing posture is acceptable, taking into account the EU/EFTA/UK exclusion.
- MCP Connectors: review enabled federated connectors by default and update data governance documentation to incorporate real-time access without indexing.
- Native Applications: decide whether to enable application creation for eligible creators, potentially limiting it to security groups, and integrate these applications into the existing management cycle, just like Power Apps.
- Security: validate patch levels across SharePoint, Teams, Power Automate and Office, and ensure VS Code and the GitHub Copilot extension are up to date.
- Costs: model Copilot Credits consumption now and configure spending policies before adoption accelerates.
- Network: confirm that
copilot.cloud.microsoftandteams.cloud.microsoftare allowed in your firewall, proxy, conditional access and URL filtering — the redirect applies regardless of your preparation.
Key takeaways
This week confirms three underlying trends for Microsoft Copilot. First, model choice is becoming a central argument rather than a premium feature: three frontier model families — OpenAI, Anthropic and xAI — now coexist on M365 Copilot, Copilot Studio and GitHub Copilot. Enterprises need a model governance strategy, not just a one-time selection.
Second, MCP is becoming the connective tissue of the platform: the GA launch of federated connectors means that real-time access without indexing is production-ready. Combined with native application creation in Copilot Studio, the platform is evolving from an assistant to a true application development surface.
Finally, governance burden is growing faster than the tooling available to manage it. A CVSS 9.3 vulnerability in Copilot Studio, a 44% reduction in credits for Enterprise customers, URL migrations and a constantly expanding connector catalog all demand administrator attention. If your organization is adopting Copilot at scale, it's time to treat it as a standalone infrastructure — with the same level of lifecycle management, security review and cost governance as any other enterprise platform.
