Microsoft Rebuilds Copilot Studio With New Engine, Replacing Topics With AI-Driven Skills

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Microsoft has launched a significantly revamped version of Copilot Studio, accessible via a preview environment, marking a fundamental shift from its origins as Power Virtual Agents. The platform has moved away from its old chatbot-style architecture, replacing predefined 'Topics' with 'Skills' — optional markdown-based prompts that the AI model selects dynamically based on user intent. A new 'IQ' system provides agents with grounded access to organisational data, including emails, OneDrive files, and Microsoft Fabric sources, without requiring manual configuration. The updated interface is described as cleaner and more intuitive, with an improved testing panel that displays the agent's reasoning steps in real time. The overhaul represents a backend engine migration that Microsoft undertook to bring Copilot Studio closer in capability to modern large language model platforms.

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