Google Set to Offer Deep Discounts on US Government Cloud Contracts

Google is reportedly preparing to offer significant discounts on its cloud computing services to US government agencies, matching rival discounts from Oracle and expected to be followed by Microsoft and Amazon. The agreement comes as the government seeks to curb spending. Google previously agreed to provide a 71% discount on its business applications suite until September.

Google is reportedly preparing to offer substantial discounts on its cloud computing services to US government agencies, mirroring similar deals struck by Oracle and expected from Microsoft and Amazon. This move aligns with the Trump administration's efforts to reduce federal spending. Google previously agreed to provide a 71% discount on its business applications suite until September [2].

The Financial Times reported that Google's cloud contract is likely to include significant discounts, potentially finalizing the deal within weeks. A senior General Services Administration official confirmed that Google's discounts are expected to be similar to those offered by Oracle, which included 75% reductions on some software contracts and substantial reductions on cloud computing services [1]. Microsoft's Azure and Amazon Web Services are also anticipated to follow with equivalent discounts, though negotiations with these companies are less advanced [1].

The four major cloud providers—Google, Microsoft, Amazon, and Oracle—account for the bulk of the government's annual $20 billion cloud services spending. The Trump administration is aiming to slash IT procurement costs as part of its Department of Government Efficiency initiative [1]. This initiative, previously led by Elon Musk, seeks to streamline government operations and reduce costs.

The Oracle deal, which set a precedent for the current negotiations, could generate over $30 billion in yearly revenue by fiscal 2028, according to regulatory filings. Jefferies analysts called the Oracle deals a "pivotal moment" in the company's transition to hyperscale cloud status [1]. This indicates that the government's push for discounts could have significant implications for the cloud computing industry.

References:
[1] https://www.benzinga.com/markets/equities/25/07/46360515/trump-pushes-google-amazon-microsoft-to-cut-cloud-prices-20-billion-it-budget-on-chopping-block-as-oracle-sets-precedent-report
[2] https://m.economictimes.com/tech/technology/google-to-discount-cloud-computing-services-for-us-government-ft-report/articleshow/122380332.cms