# AI and Microsoft Teams.

URL: https://levystreet.com/integrations/microsoft-teams/
Updated: 2026-10-19

How to connect AI to Microsoft Teams in 2026: Copilot, Copilot Studio credits, the Agents SDK, team-level permissions and an assistant on approved data.

## Short answer

AI connects to Microsoft Teams through Microsoft Copilot in Teams, Copilot Studio agents published to Teams, custom bots built with the Microsoft 365 Agents SDK, or Microsoft Graph and the Work IQ MCP server. For New Zealand organisations, an internal Teams assistant works best with a register of approved sources, each with an owner and an audience, and team-level rather than tenant-wide permissions.

- Copilot in Teams needs a Microsoft Copilot licence; the business add-on lists at NZ$34 a user a month.
- Copilot Studio charges 12 credits for a tenant-grounded generative answer to an unlicensed user.
- Resource-specific consent lets a team grant an app access to that team only.
- Graph subscriptions to Teams messages expire after three days and must be renewed.

## What Microsoft's built-in AI does in Teams today

A Microsoft Copilot licence (formerly Microsoft 365 Copilot) puts Copilot inside Teams and the Office apps, grounds it in your organisation's data through Work IQ, and adds Microsoft's Researcher, Analyst and Facilitator agents. In New Zealand the Copilot Business add-on lists at NZ$34 per user per month paid yearly, excluding GST, discounted to NZ$29.14 for the first year on commitments made by 31 December 2026 ([Microsoft NZ](https://www.microsoft.com/en-nz/copilot/pricing/business), checked 19 October 2026). Free Copilot Chat users can use agents your organisation builds, but only on a metered basis, and using agents from Copilot Chat needs an Azure subscription.

## Integration routes and when to use each

| Route | What it gives you | Use it when |
|---|---|---|
| Microsoft Copilot in Teams | Meeting recaps, chat summaries and answers across Microsoft 365 | Most staff are licensed and the need is general |
| [Copilot Studio](/tools/copilot-studio/) agent in Teams | A low-code agent over chosen sources, billed in Copilot Credits for unlicensed users | One internal assistant, built by a capable admin |
| Microsoft 365 Agents SDK | Custom agents in .NET, JavaScript or Python, hosted on Azure | You need your own model, logic, tests and logs |
| Graph API with change notifications | Channel and chat messages, teams and members | Reacting to messages in specific channels |
| Work IQ MCP server | Read, create, update and delete Microsoft 365 items, including Teams chat messages | MCP-based agents acting across mail, calendar and Teams |
| Power Automate, n8n or Make | Flows triggered from Teams with an AI step | Simple notifications and approvals |

Copilot Studio agents built under a Copilot licence are for internal use; publishing to outside channels needs a standalone Copilot Studio plan. Our comparison of [Copilot Studio versus custom agents](/compare/copilot-studio-vs-custom-agents/) covers that choice in detail.

## Automation 1: an internal assistant with approved data access


- **Surface**: A Teams app in personal chat, built as a Copilot Studio agent or with the Agents SDK.
- **Approved sources**: A register listing each source (for example the HR policy library, the IT knowledge base, the current price list), its owner, the Entra group allowed to use it, and a review date.
- **Per question**: Identify the user from the incoming message, check their group membership for each source, and retrieve only from sources their groups allow, with delegated access where possible.
- **Model step**: Answer with citations and the source's review date. Questions outside approved sources get "I can't answer that from approved sources" and a named contact.
- **Human review**: Source owners approve any new source; unanswered questions are reviewed monthly to decide what to add.
- **Write-back**: None. The assistant reads and replies.


| Incoming Teams data | Used for | Rule |
|---|---|---|
| User's Entra object ID | Group checks and audit | Never trust a name typed in the message |
| Tenant ID | Rejecting other tenants | Guests and external chats get a polite refusal |
| Conversation ID | Replying in the right chat | Personal chat by default |
| Message text (HTML) | The question | Strip mentions and formatting before the model sees it |

This is the pattern behind our [staff policy assistant](/industries/education/staff-policy-assistant/) workflow. Document sources in SharePoint should use the scoped access described in [AI and Microsoft 365](/integrations/microsoft-365/).

## Automation 2: channel requests turned into tickets


1. **Install narrowly.** Add the app to the Facilities team only, with resource-specific consent to read that team's channel messages.
2. **Classify.** For each new request, the model extracts location, urgency and description.
3. **Confirm.** The app replies with a card summarising the proposed ticket; the requester confirms or edits it.
4. **Create.** Only on confirmation does the app create the ticket in your job system and post the reference.


## Permissions and approval design

Resource-specific consent lets an app access "the data of a specific instance of a resource type" without access to every instance in the tenant, so a team can grant a bot ChannelMessage.Read.Group for that team alone ([Microsoft Learn](https://learn.microsoft.com/en-us/microsoftteams/platform/graph-api/rsc/resource-specific-consent), updated 12 October 2026). Prefer it to tenant-wide application permissions to read all channel messages. Keep the assistant read-only, put the requester's confirmation in front of every ticket, and log user, sources and answer. The approval patterns are set out in our guide to [agent permissions and approvals](/engineering/agent-permissions-and-approvals/).

## Costs and limits

Copilot Studio charges 2 credits for a generative answer, 10 for tenant Microsoft Graph grounding and 5 for an agent action; Microsoft's example of a tenant-grounded answer is 12 credits. Use by licensed Copilot users is listed as no charge ([billing rates](https://learn.microsoft.com/en-us/microsoft-copilot-studio/requirements-messages-management), updated 2 October 2026). Pay-as-you-go is US$0.01 a credit, or US$200 a month for a 25,000-credit pack.

Illustrative example: 40 unlicensed staff asking 5 questions each working day is 4,200 answers, or 50,400 credits a month: about US$504 pay-as-you-go, or US$404 with two packs. Licensing the same 40 people at NZ$34 is NZ$1,360 a month, but buys Copilot everywhere. A custom Agents SDK bot answering the same questions at 8,000 input and 400 output tokens costs about US$84 in Claude Sonnet 5.5 fees, plus Azure hosting and support (list prices, 19 October 2026).

## Where it goes wrong

- **Subscription limits.** Graph subscriptions to Teams messages last at most three days, and an organisation can hold 10,000 Teams subscriptions across all apps, after which new ones fail with 403 ([Microsoft Learn](https://learn.microsoft.com/en-us/graph/change-notifications-overview)).
- **Oversharing.** An agent grounded in SharePoint inherits every loose sharing link. Review sources before they enter the register.
- **Data location.** Teams data can be stored in New Zealand, but AI processing may happen offshore.
- **Licence changes.** From 1 November 2026, new or renewed Power Platform licences get no seeded AI Builder credits, so Teams flows with AI steps will draw on Copilot Credits.
- **Manual recovery.** Removing the app from a team revokes its consent there; disabling it in the Teams admin centre stops it everywhere. Keep the answer log to find and correct anyone who got a wrong answer.

Prefer Slack? See [AI and Slack](/integrations/slack/). We build governed Teams assistants as part of our [AI integration services](/services/ai-integration/).

## Questions people ask

### Do we need Copilot licences to have an AI assistant in Teams?

No. Licences put Microsoft Copilot inside Teams and the Office apps for licensed staff. Without them, you can publish a Copilot Studio agent to Teams and pay per use in Copilot Credits, or build your own bot with the Microsoft 365 Agents SDK and pay for hosting and model use. The right answer depends on how many people will use it and how often.

### How do we stop a Teams bot reading every channel?

Use resource-specific consent. Instead of a tenant-wide Graph permission to read all channel messages, the app requests a permission such as ChannelMessage.Read.Group, which applies only to the team it is installed in. Install it only in the teams that need it, and keep a list of where it is installed. Removing the app from a team removes its access there.

### What does a Copilot Studio agent in Teams cost?

For staff with a Microsoft Copilot licence, Microsoft lists employee-facing use as no charge. For unlicensed staff, a generative answer grounded in your tenant's data costs 12 Copilot Credits, and pay-as-you-go credits are US$0.01 each. Forty staff asking five questions each working day comes to about US$504 a month pay-as-you-go, or about US$404 with two capacity packs.

### Is Teams data processed in New Zealand when we use AI?

Microsoft 365 data, including Teams, can be stored at rest in New Zealand, and Advanced Data Residency extends that to Copilot data at rest. Processing is different: Microsoft says queries from outside the EU may be processed in the US, the EU or other regions, and New Zealand is not on its in-country processing roadmap as updated in April 2026.


## Sources

- [Microsoft Copilot business pricing (NZ)](https://www.microsoft.com/en-nz/copilot/pricing/business)
- [Copilot Studio billing rates and management](https://learn.microsoft.com/en-us/microsoft-copilot-studio/requirements-messages-management)
- [Microsoft Copilot Studio licensing guidance](https://www.microsoft.com/licensing/guidance/Microsoft-Copilot-Studio)
- [Copilot Studio pricing](https://www.microsoft.com/en-us/copilot/pricing/copilot-studio)
- [Microsoft 365 Agents SDK documentation](https://learn.microsoft.com/en-us/microsoft-365/agents-sdk/)
- [Resource-specific consent for apps](https://learn.microsoft.com/en-us/microsoftteams/platform/graph-api/rsc/resource-specific-consent)
- [Set up notifications for changes in resource data](https://learn.microsoft.com/en-us/graph/change-notifications-overview)
- [Work IQ MCP server overview](https://learn.microsoft.com/en-us/microsoft-365-copilot/extensibility/work-iq/mcp/overview)
- [Microsoft 365 Advanced Data Residency overview](https://learn.microsoft.com/en-us/microsoft-365/enterprise/m365-dr-adr-overview)
- [AI Builder licensing](https://learn.microsoft.com/en-us/ai-builder/administer-licensing)

Published by Levy Street (https://levystreet.com), Wellington, New Zealand.