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I believe the issue above is caused by publishing a copilot studio agent from copilot studio to the web and teams' channels puts padding around the uploaded icon irrespective of the icon's size.
Contrast this to a different icon edit ui for copilot agent within copilot m365 ui:
I believe publishing to channel from copilot studio is causing the icon to shrink unneccessarily in this case by applying padding around all sides of the icon.
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