May brings one of the more eventful licensing months of the year. Microsoft has finally released the long-awaited Microsoft 365 E7 Frontier Suite, the CSP grace period is gone and replaced by a new Extended Term construct, Windows 365 Business gets a price decrease, and Software Subscriptions in CSP move into parity with Software Assurance Benefits. On top of that, the Product Terms see meaningful updates around AI, Defender Experts, and the now generally available Agent 365.

Below is a consolidated breakdown of the most important changes and what they mean for your licensing strategy.

Microsoft 365 E7 Frontier Suite Now Available

As of May 1, 2026, the Microsoft 365 E7 Frontier Suite is generally available for purchase. The suite bundles Copilot, Agent 365, and the Entra Suite into a single SKU.

Key details

• Available as a monthly, annual, or triennial subscription.
• Available through the CSP program, with launch promotions running this month.
• Agent 365 is also generally available as a standalone product from May 1, 2026, in addition to being part of the E7 Frontier Suite.

For organizations already running Microsoft 365 E5 with Copilot, the Frontier Suite is the first packaged step into agent-based productivity at scale. We recommend modeling the suite against the sum of its parts before committing. The answer depends heavily on your current Entra footprint and your Copilot adoption curve.

CSP Grace Period Replaced by the Extended Term Option

The second major shift in May is structural rather than commercial. Starting May 4, 2026, the free grace period within the CSP program is gone. If a license is still required after the subscription expiration date, it must be moved to the new Extended Term.

How the Extended Term works

• Pricing is the monthly rate (which sits roughly 20% above the annual rate), with an additional 3% uplift.
• It is intended as a short bridge, useful when a renewal is on hold pending a strategic licensing decision.

Three options at the end of a CSP subscription

At the end of any CSP subscription, customers now have three explicit choices:

• Stop the CSP subscription.
• Renew the CSP subscription.
• Move the subscription to the Extended Term.

If no choice is made, the subscription rolls automatically into the Extended Term. That default is the part most customers will want to plan for: without an active decision, you will pay the monthly rate plus the 3% uplift by inaction.

Price Decrease on Windows 365 Business

From May 1, 2026, Microsoft is dropping the price on Windows 365 Business licenses. The reduction applies to new customers immediately and to existing customers from their next renewal date.

The decrease is enabled by an updated Cloud PC reconnection experience that optimizes resource usage on the back end. For SMBs already on Windows 365 Business, this is a rare downward price movement worth checking against your renewal calendar.

Software Subscriptions in CSP Now Equivalent to Software Assurance Benefits

For years there has been a small but meaningful gap between Software Assurance Benefits and the benefits attached to Software Subscriptions purchased through CSP. As of April 1, 2026, Microsoft has aligned the two: the benefits of Software Subscriptions in CSP are now equivalent to Software Assurance Benefits.

What this changes

• Improved use rights for licenses deployed in Azure or on an Authorized Mobility Partner’s shared hardware.
• The outsourcing option is now available for SQL Server.
• External Connectors are now available for Windows Server and RDS under Software Subscriptions in CSP.

This is a quietly significant change. Customers who previously needed Software Assurance specifically to gain mobility or outsourcing rights now have a CSP path to the same outcome.

Power Apps per App Returns to CSP

In January 2026, Microsoft confirmed the discontinuation of Power Apps per App across all available contract types. Following customer feedback, particularly from organizations that prefer the per-app model over the unlimited use app, the Power Apps per App license is back.

From now on, the license is available again in the CSP program.

CSP Promo Calendar

A number of CSP promotions remain active through May. The two new entries this month are the introductory promos for the Microsoft 365 E7 Frontier Suite, which align with the suite’s general availability on 1 May 2026.

Three-year subscription for M365 E3 and M365 E5

• A 10% discount is available if you are willing to commit to M365 E3 or M365 E5 for three years.
• Minimum quantity: 100 seats.
• Duration: Until 30 June 2026.

New M365 E5 customer — annual term

• Customers new to M365 E5 can benefit from a 15% discount on a one-year subscription.
• Duration: Until 30 June 2026.

Getting started with Microsoft 365 E7

• Microsoft 365 E7 is now generally available. New customers purchasing a minimum of 10 licenses on an annual subscription can take advantage of a 10% introductory discount.
• Duration: 1 May 2026 until 31 December 2026.

Accelerate with Microsoft 365 E7

• For a broader roll-out of Microsoft 365 E7 (minimum 100 licenses), Microsoft offers a 15% discount on an annual or triennial subscription.
• Duration: 1 May 2026 until 31 December 2026.

Microsoft 365 Business Premium with Copilot Business

• The bundled offering of Microsoft 365 Business Premium with Copilot Business is available with a 25% discount when purchasing at least 10 subscriptions.
• Duration: Until 30 June 2026.

Copilot Promos

The Copilot promo set continues through 30 June 2026 and is structured around three customer profiles: those starting out, those scaling up, and those rolling Copilot out across the full estate.

Getting started with Copilot

• New to Copilot? Organizations purchasing 10 or more licenses for the first time can take advantage of a 15% introductory discount.
• Minimum quantity: 10 licenses.
• Duration: Until 30 June 2026.

Scale up with Copilot

• Already using Copilot and looking to grow? Microsoft offers a 20% scale-up discount.
• Minimum quantity: 100 licenses.
• Duration: Until 30 June 2026.

Copilot for all

• Planning to roll out Copilot to all your users? Microsoft offers a 30% discount (and up to 40% in specific cases) if you are deploying Copilot to at least 80% of your M365 E3 and E5 users.
• Minimum quantity: 300 licenses.
• Duration: Until 30 June 2026.

Microsoft 365 Copilot Business

• For Business customers, Microsoft offers Copilot for Business at a 15% discount.
• Maximum quantity: 300 licenses.
• Duration: Until 30 June 2026.

Three-year promo for Microsoft 365 Purview and Defender Suite

• For M365 E3 customers looking to invest in the security and compliance portfolio, Microsoft offers a 10% discount on a three-year commitment.
• Minimum quantity: 100 licenses.
• Duration: Until 30 June 2026.

Updates to the Microsoft Product Terms

Universal Licensing Terms for Online Services

Microsoft updated the Responsible Use of Microsoft AI Services section to cover the use of automated classifiers for AI services.

Office Applications and Microsoft 365 Applications: “Use for Training AI Models”

A new clause clarifies that outputs generated through Robotic Process Automation (RPA), bots, or similar technologies may not be used to develop, train, evaluate, or improve AI or machine learning models, or to replicate product functionality. The change clarifies existing intent and does not alter permitted use.

Microsoft 365 Unattended Licenses

Microsoft tightened the language around the M365 Unattended license. The license remains intended for automation and task execution scenarios, and the same RPA / bot output restriction described above now applies explicitly: outputs may not be used to train or replicate AI models. Again, this is a clarification rather than a change in permitted use.

Microsoft Defender Experts

Updated prerequisites for Microsoft Defender Experts for Servers and Microsoft Defender Experts for Hunting – Servers:

• Both require Defender for Servers Plan 1 or Plan 2.
• Both also require Microsoft Entra ID P2.

If you are scoping a Defender Experts deployment, confirm both prerequisites are in place before signing.

Power Platform: New Product Available

The availability table now includes the Windows 365 for Agents add-on for Microsoft Copilot Studio.

Agent 365: Now in the Product Terms

With Agent 365 generally available, it is now formally included in the Product Terms. The added language focuses on data privacy and how data flows between Agent 365 and the Microsoft estate:

Agent 365 integrates data between Microsoft Products, including Microsoft Defender, Entra, Purview and other Online Services such as Microsoft 365, Copilot Studio, or Foundry (“Agent 365 Integrated Services”). Customer Data and Personal Data may be copied to, or processed and stored by, various Agent 365 Integrated Services. Once data is transferred between and to the Agent 365 Integrated Services, such data is governed by the Product Terms (including the applicable compliance, data handling, privacy, and security commitments) of the Microsoft Product where the data is processed or stored. Customers are responsible for evaluating whether data flows between Microsoft Products are appropriate for their organization’s usage and compliance requirements.

The takeaway: Agent 365 is, by design, a cross-product integrator. The compliance posture of any given data flow is inherited from the destination service. For regulated industries, that is worth a fresh look at your data governance review before broad rollout.

Assess How These Updates Impact Your Environment

May 2026 marks the point where the agent era moves from preview into the price list, and where CSP shifts from a forgiving program to one that rewards decisions made on time. Between the Frontier Suite, the new Extended Term, the Windows 365 Business price decrease, and the Software Subscriptions parity update, almost every Microsoft customer has at least one item on this list that will affect their next renewal cycle.

If you would like help modeling the Frontier Suite against your current estate, planning around the new CSP Extended Term, or reviewing the Agent 365 data flows for your compliance program, our team can walk you through the changes and the options.

Reach out today for a licensing review or a tailored advisory session.