Microsoft Copilot on Windows: Local Files, Actions and Agents

Microsoft says Copilot on Copilot+ PCs will soon be able to read your local files and recent activity (with your permission), take actions across Windows, and run some of its work on AI models on the PC itself. None of this has shipped: Microsoft expects it to “begin rolling out in the coming months”. What businesses can use today is Microsoft Execution Containers (MXC), now generally available on Windows 11, which lets IT limit what any AI agent on a PC can reach.

The source is Building Windows for hybrid intelligence, published on 7 October 2026 by Pavan Davuluri, Microsoft’s head of Windows + Devices. Everything below comes from that post unless marked otherwise.

What changes in Copilot on Copilot+ PCs

Microsoft describes three new local capabilities:

• Local context. “With your permission”, Copilot can understand relevant content on your PC, “including files and recent activity”.
• Local actions. Copilot can act on your behalf across Windows. Examples: organising files, device diagnostics, troubleshooting, coding and on-device workflows.
• Local models. Copilot can use AI models running on the PC for suitable tasks and use the cloud for the rest. Microsoft calls this mix “hybrid intelligence”.

These feed the three parts of the new Copilot. Home can pull in the files you have been working on. Code builds native Windows apps from a prompt and runs code with MXC support. Autopilot is described as “a persistent, proactive and personal agent” that keeps working on your behalf while you do other things.

Microsoft also plans to bring the new Copilot into Search on the taskbar, starting with “thousands of new actions” available from there. That part is opt-in and will “first start rolling out to select markets later this year”.

What it means for privacy

As Microsoft states it, local context is opt-in and you stay “in control at every step”. The post does not explain the permission screens, what is stored, or what goes to the cloud when a task leaves the local model. Until the features ship and those details are documented, treat Copilot’s file access like any other assistant’s (our ChatGPT vs Claude vs Gemini comparison sets out the privacy defaults of the three biggest). Grant it per folder or per task where you can, and keep it away from client data, HR files and credentials. Autopilot needs the most care: an agent that works while you look elsewhere can do more damage before anyone notices.

What IT admins can control with MXC

The enterprise half of the announcement rests on three ideas:

• Containment. MXC lets organisations “define which files and networks agents can access”, with policies enforced at runtime. Isolation options include process and session isolation, WSLc, virtual machines and Windows 365 for Agents.
• Identity. IT can see which agent acted, separately from the person using the device.
• Manageability. Agent activity feeds into Agent 365 and Intune for policy, monitoring and governance. A footnote warns that “governance at scale may require additional services”.

Microsoft lists these agents as already supporting MXC: OpenAI’s Codex, GitHub Copilot, OpenClaw, Replit, LM Studio, NVIDIA’s OpenShell and Unsloth AI. Those listed as coming include Anthropic’s Claude Code, Box, Egnyte, Heidi Health, Hermes Agent by Nous Research, Manus, Perplexity, Raycast and Simular. The rule from our AI coding assistants guide applies: give an agent no more access than the task needs. MXC turns that habit into a policy Windows enforces.

GitHub HydraFusion goes local

GitHub’s HydraFusion, which Microsoft says routes each task to a suitable cloud model, will also be able to use models running on the device. It is due as an experimental preview in the GitHub Copilot app, GitHub Copilot CLI and Visual Studio Code “later in October”.

Update (15 October 2026): GitHub’s 14 October HydraFusion update added HydraFusion Max, a higher-effort option, and refreshed the model pool (Claude Opus 5.5, GPT-6 Astra, GPT-6.1 Sol and GPT-6 Luna), in research preview on Copilot Pro, Pro+, Business and Enterprise. It is cloud-only and names no local models.

What is still unknown

The announcement gives no prices, no dates beyond “coming months” and “later in October”, and no list of supported Copilot+ PCs. At our 22 October check, Microsoft’s post carried no update note and GitHub’s changelog (entries to 21 October) had no on-device HydraFusion release, so nothing local has shipped yet. Footnotes say a Windows Update is required and that availability may vary by device, market and silicon platform. Speed comparisons against a MacBook Pro come from Microsoft and NVIDIA’s own testing; our guide to reading AI model announcements explains why to treat those with caution. We will update this post when Microsoft publishes admin documentation or the features reach users. More AI news is on our News page.