Microsoft will let Copilot act on local files on Windows PCs

Microsoft is expanding Copilot's capabilities on Windows PCs, enabling the AI assistant to manage and alter local files and execute specific tasks using on-device AI models. This announcement was made at Microsoft's Hybrid Intelligence event, where the company outlined strategies to combine local and cloud AI processing to reduce AI costs and enhance data control for customers.

Three new Copilot features will be introduced to Copilot+ PC users "in the coming months." These include Copilot's access to local files and recent user activity, allowing it to generate more context for its outputs; the ability for Copilot to perform actions like moving files and altering settings; and the option to run Copilot on local AI models for certain tasks, accessing cloud servers only when necessary.

Microsoft's approach reflects market demands, according to Biswajeet Mahapatra, a principal analyst at Forrester. "The demand we see is not for AI that runs exclusively on-device, but for AI that can intelligently decide which workloads should run locally and which belong in the cloud," Mahapatra explained. Microsoft also unveiled more robust hardware, such as the Surface Laptop Ultra and Surface RTX Spark Dev Box, and improved AI models designed for device use.

The company aims to provide more powerful AI tools as current business laptops largely rely on cloud-based Copilot. While Microsoft highlighted new AI-capable hardware and the growing presence of Copilot+ PCs, most enterprise fleets will take several years to refresh. For now, the distributed nature of enterprise PCs means that immediate opportunities for AI adoption among organizations already investing in AI PCs and high-performance devices are limited.

Microsoft is also addressing security concerns regarding on-device agents. The introduction of Microsoft Execution Containers (MXC) on Windows 11 allows organizations to set policies defining what files and networks agents can access, ensuring greater control and security when enabling Copilot to interact with local files. Mainelli noted, "Microsoft took major steps in telling that story today, and we'll see how companies respond."

Enterprises are advised to manage agents on Windows devices similarly to other automation platforms, emphasizing trust based on controls rather than the AI itself.