Microsoft gives Copilot access to your local files and control of Windows

Microsoft wants its AI assistant to stop just talking about your computer and start operating it.

At its Windows and Surface event on October 7, 2026, the company showed off a Copilot upgrade that will let the assistant reach into local files on your PC and carry out actions across the operating system.

The upgrade falls under a concept Microsoft is calling “Hybrid Intelligence.” Under this approach, apps and tools draw on a blend of AI models: some running on the device itself, others running in the cloud, with the goal of finishing tasks efficiently.

Taxes, accountants, and an AI that reads your inbox

Jacob Andreou, Microsoft’s EVP of Copilot, handled the on-stage pitch. He walked the audience through a video demo built around a task few people enjoy: filing taxes.

In the demo, Andreou told Microsoft’s Autopilot tool that he had received an email from his accountant. He then asked the agent to help get her what she was requesting.

Built on a year of previews, and a new laptop

In 2025, Microsoft put Copilot Actions into experimental preview for Windows Insiders, the company’s early-access testing group, with features covering local file operations and local file search.

Andreou’s own trajectory tracks with it: he was promoted to EVP of Copilot in March 2026, taking charge of both consumer and commercial initiatives.

Microsoft announced the Surface Laptop Ultra at the event, a machine equipped with Nvidia RTX Spark silicon aimed at improved AI performance.

The guardrails, and why they exist

The company has built in several layers of control. AI activation is opt-in, folder access is restricted, and Copilot agents operate under separate accounts from the user.

Microsoft has also emphasized agent workspaces and user-controlled settings, designs intended to keep privacy and security in the foreground.

What this means for Microsoft and its rivals

Microsoft is leaning on the one asset its AI competitors cannot easily copy: ownership of the operating system that a huge share of the world’s PCs run on.

OpenAI and Anthropic build powerful models, but they generally reach users through apps and interfaces layered on top of someone else’s platform. Microsoft can wire its agent directly into Windows, which turns deep OS integration into its main differentiator as demand grows for AI that handles complex, multi-step work.

The Microsoft 365 Copilot user base remains small, with only a limited slice of users engaging with premium features.

The opt-in design means adoption depends entirely on users actively choosing to grant access, rather than discovering the feature by default.

For enterprises, restricted folder access plus separate agent accounts give IT departments something concrete to evaluate instead of a promise.