Google Targets Government Contracts with Major Price Cut

Google is slashing prices for its Workspace apps for U.S. federal agencies in a bold move to undercut Microsoft and tap into the government’s growing cost-saving agenda under President Donald Trump.

As part of a new agreement with the General Services Administration (GSA), Google will offer up to 71% discounts on its business software, aiming to generate $2 billion in potential savings across the federal government.

The initiative comes as the Department of Government Efficiency (DOGE)—spearheaded by Elon Musk—leads a wave of contract cancellations and agency cuts.

A Blow to Microsoft’s Market Share

Microsoft has long dominated the U.S. government software space, holding about 85% of market share as of 2021, according to Omdia.

By offering deep discounts valid until September 30, Google hopes to establish a stronger foothold in a space historically locked down by its rival.

“This volume-based agreement is a leap forward,” said a GSA spokesperson. “It replaces agency-level deals with a government-wide cost model.”

Google Enhances Workspace with AI to Gain Edge

To boost its appeal, Google Workspace now includes powerful AI tools built on its Gemini large language model, offering features that rival Microsoft’s AI-integrated Office suite.

Workspace is already used by the Air Force Research Laboratory, which supports both the U.S. Air Force and the Space Force, showcasing Google’s growing relevance in federal technology infrastructure.

Aligning with Trump’s Government Efficiency Drive

DOGE’s broader effort to streamline operations has led to layoffs and program cuts, making Google’s budget-conscious offer timely and politically strategic.

What It Means for Government Tech Spending

If adopted government-wide, the agreement could dramatically shift how agencies approach software procurement, potentially loosening Microsoft’s grip and forcing renewed competition in public sector tech.

“Google is no longer just knocking on the door—it’s inside the building,” said a federal procurement analyst.