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Microsoft CEO Satya Nadella introduces Microsoft 365 Copilot in a prerecorded event Thursday morning.

Microsoft was encroaching onto Google’s turf when it announced an AI-powered Bing search engine last month. This morning, Microsoft started the equivalent of a home game — promising to use artificial intelligence to dramatically expand the powers of Word, Excel, PowerPoint, Teams, and other core work apps.

The preview of “Microsoft 365 Copilot” in a pre-recorded online event followed Google’s attempt to preempt Microsoft’s news earlier this week. The search giant showed plans to make AI a “collaborative partner” in its Google Workspace apps, including Gmail, Docs, Slides, Sheets, Meet, and Chat.

Many of the promised capabilities are similar, including the ability to use AI to generate drafts of emails and documents, analyze and extract insights from spreadsheets, and intelligently prioritize emails for response.

But for Microsoft, the stakes are much higher in productivity than in search.

Microsoft Office and related cloud services brought in more than $67 billion in revenue in the company’s last fiscal year, up 30% year-over-year, and representing more than a third of companywide revenue.

The ongoing growth reflects Microsoft’s successful transition of its Office franchises more than a decade ago from traditional software licensing and on-premises installations to the modern world of the cloud and subscription pricing.

Now, by adding AI to the mix, the company is aiming to reinvent Office again.

“This will radically transform how computers help us think, plan and act,” said Microsoft CEO Satya Nadella in his introduction Thursday morning.

“Just as we can’t imagine computing today without a keyboard, mouse or multi-touch, going forward, we won’t be able to imagine computing without copilots and natural language prompts that intuitively help us with continuation, summarization, chain-of-thought reasoning, reviewing, modifying, and acting,” Nadella said.

Microsoft’s features also include a new Business Chat tool that “brings together data from across documents, presentations, email, calendar, notes and contacts to help summarize chats, write emails, find key dates or even write a plan based on other project files,” Microsoft said in a news release this morning.

Although Microsoft is working closely with OpenAI on these technologies, it “didn’t just Connect Chat GPT to Microsoft 365,” said Jared Spataro, Microsoft corporate vice president of Modern Work & Business Applications, in the presentation.

Spataro described the technology as a sophisticated series of interactions between a customer’s content and files, Microsoft 365, and a large language model that works with human readable text.

Microsoft’s announcement comes amid growing scrutiny of its AI initiatives, and questions about whether the technology is truly ready for prime time.

Microsoft 365 Copilot’s behind-the-scenes technologies includes “responsible AI checks, security, compliance and privacy reviews,” Spataro said.

“Sometimes Copilot will get it right,” Spataro said. “Other times it will be usefully wrong, giving you an idea that’s not perfect, but still gives you a head start.”

Microsoft already has some significant experience in human-AI collaboration. Existing integrations of OpenAI technology in Microsoft products include the popular GitHub Copilot feature, which gives software developers a virtual AI pair programmer to suggest code and functions as they create apps and services.

One big unanswered question is how much Microsoft 365 Copilot will cost. Microsoft says pricing and licensing details will be announced soon.

Also unclear is when the features will be widely available. Microsoft 365 Copilot is “already being tested with a small group of customers to get the critical feedback required to improve these models as they scale,” the company says.

This measured rollout seems especially wise in light of recent financial news, making it unlikely, for now, that Microsoft 365 Copilot could be blamed for a bank failure or other cataclysmic business event.

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