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A practical look at the context layer that grounds AI agents in knowledge, data, work, and the web.
This article breaks down Microsoft IQ, the context layer that grounds AI agents in four kinds of enterprise knowledge: unstructured documents, structured business data, human work signals from Microsoft 365, and fresh information from the web. You will learn what each of the four engines (Foundry IQ, Fabric IQ, Work IQ, and Web IQ) does, how they fit together inside a single agent architecture, and where Foundry IQ unifies the others. I walk through a worked refund processing agent so you can see how the pieces cooperate, why your agent instructions still matter after the IQs remove most of the plumbing, and how Agent 365 gives an agent its own identity and security boundary.
By the end, you should be able to decide which IQ to reach for, sketch the architecture, and know exactly where to start building.
Reference here.
The real problem: context rot and the demo-to-production gap #
Most agent demos work because the author already knows the answer and wires the agent to one clean source. Production is the opposite. A support agent needs the customer’s…