Microsoft 365 Copilot: How Much It Sees

Key insights

• Copilot Chat now accepts much larger uploads — licensed users can attach files up to 512 MB per prompt, a big jump from earlier 1 MB limits.
  Use larger documents interactively, but expect other limits to still apply.
• File-count and source limits matter: Copilot Studio supports up to 500 files per agent overall, while source-specific rules apply (for example, OneDrive knowledge sources limit files and folders and have smaller per-file caps).
  Always check the storage-specific quotas where you keep your content.
• Indexing is selective — Copilot does not always fully read or index every uploaded file. Sensitivity labels, password protection, and unsupported features block indexing.
  If a file is excluded, its content won’t inform Copilot’s answers.
• Synchronization and processing state affect availability: content can take several hours to sync and move from “In Progress” to “Ready” before Copilot can use it.
  Plan for delays when adding or updating large document sets.
• Image generation and feature access depend on your license: paid Copilot users retain full capabilities, while unlicensed users face reduced or capped image creation since April 2025.
  Feature access can change with account type and policy updates.
• Practical takeaway — Copilot “sees less than you think”: large uploads don’t guarantee full visibility. Supported formats, sensitivity settings, sync timing, and source quotas determine what Copilot actually uses.
  To improve results, use supported file types, remove unnecessary protections where safe, and verify files reach the “Ready” state before relying on AI answers.

Video summary and context

The newsroom reviewed a recent YouTube video by Nick DeCourcy (Bright Ideas Agency) that examines how Microsoft 365 Copilot handles uploaded files. The piece argues that although users can upload large documents, the AI often “sees less of your files than you think,” and the video demonstrates why that claim matters for everyday use. Consequently, the report highlights both technical limits and policy-driven restrictions that shape Copilot’s real-world behavior.

Importantly, this article summarizes the video and does not represent the author’s original work. Therefore, the focus here is to translate the video’s tests and conclusions into a clear, objective account for readers who want practical takeaways. In doing so, the article emphasizes tradeoffs, potential pitfalls, and adoption challenges that organizations should consider.

File upload capacity and practical limits

The video explains that Copilot Chat now accepts much larger uploads per prompt, notably up to 512 MB for licensed users, a big change from earlier limits near 1 MB. However, larger per-file capacity does not remove other constraints, because different storage sources and knowledge ingestion paths impose their own size and count limits. For example, knowledge sources can cap both the number of files and the maximum size per file in a way that changes how much content becomes usable to the AI.

Moreover, some platforms restrict files to much smaller sizes when they feed into a knowledge base, and administrators may see limits like a few dozen or a few hundred files per agent. Thus, while uploads appear generous at the interface level, backend quotas often reduce the effective amount Copilot can index and reason over. As a result, teams should plan around both the visible upload limit and the hidden source-based caps.

Indexing, visibility, and timing

Beyond raw storage limits, the video shows that Copilot does not always index every uploaded file immediately or at all, which means the AI’s answers may not reflect the full content you provided. For instance, protected, password‑encrypted, or sensitivity‑labeled documents are recognized but typically excluded from indexing, so they won’t inform responses. Additionally, synchronization delays—often several hours—can keep newly added material in an “in progress” state and therefore unavailable until processing finishes.

Consequently, users who expect instant, comprehensive analysis should temper expectations and verify whether files are marked as ready for use. The delay and partial indexing create a gap between what users upload and what Copilot can draw from, and this gap can affect workflows that need timely, complete AI assistance. Therefore, monitoring status indicators and planning sync windows become essential steps for reliable results.

Security and compliance tradeoffs

The video stresses that many visibility limitations are deliberate tradeoffs to protect privacy and maintain compliance within organizations. On one hand, excluding sensitive or encrypted documents reduces the risk of unintended exposure and helps meet regulatory obligations; on the other hand, it prevents the AI from using potentially critical information during conversations. Thus, teams must weigh the benefit of broader AI access against the imperative to safeguard confidential content.

Furthermore, administrators and compliance officers need clear policies about which content sources Copilot may index and how those sources are configured. While tighter controls improve security, they can also reduce the practicality of Copilot for certain tasks, forcing users to choose between richer AI assistance and stricter data governance. This balance remains one of the most significant implementation challenges.

Adoption implications and practical advice

For organizations exploring Copilot, the video’s tests suggest several pragmatic steps: verify which storage sources are supported, check per-source file and folder limits, and confirm that sensitive documents are intentionally excluded. Moreover, training users to check file processing states and to understand when an uploaded file will actually influence responses helps set realistic expectations and reduces friction during rollout. In short, governance and user education must go hand in hand.

Finally, the video highlights broader implications for AI adoption: adopting Copilot delivers clear productivity gains, but achieving reliable behavior requires careful configuration and ongoing oversight. Consequently, IT teams should plan pilot phases that reveal indexing behavior, stress test typical file types, and adjust policies to strike the right balance between capability and control. By doing so, organizations can get useful AI assistance while managing the risks that the video so clearly outlines.

Keywords

Microsoft 365 Copilot privacy, Copilot file access, Microsoft Copilot data access, Copilot permissions settings, Copilot data privacy, Microsoft 365 Copilot security, Copilot enterprise data access, Copilot file visibility