Google to Offer Deep Discounts on Cloud Services for U.S. Government Amid Push for Federal Savings

Google is planning to significantly reduce the cost of its cloud computing services for the United States government as part of a deal that could be finalized in the coming weeks, according to a report by the Financial Times on Friday. The move comes as President Donald Trump’s administration seeks to enforce extensive measures to rein in federal spending, including renegotiating major tech contracts.

This development follows a similar initiative by Oracle Corp (NYSE: ORCL), which last week confirmed it would provide federal agencies with a 75% discount on its license-based software, along with a “substantial” cut on its cloud offerings through November 30, according to the Wall Street Journal. Citing a senior official from the General Services Administration (GSA), the Financial Times noted that Google’s forthcoming deal is likely to match those terms, with comparable pricing adjustments anticipated soon from Microsoft’s Azure and Amazon Web Services (AWS), the two other dominant players in the U.S. government cloud services market.

“Every single one of those companies is totally bought in — they understand the mission,” the GSA official told the Financial Times, expressing confidence that discounted arrangements will be implemented across all four major providers.

Neither Google nor the GSA has provided an official comment in response to the report as of Friday. In April, Google had already agreed to reduce the cost of its business productivity apps suite for U.S. federal agencies by 71% until September 30, a measure projected to generate as much as $2 billion in cost savings if widely adopted across government departments (Reuters, April 2024).

The intensified push for aggressive discounts underscores how the federal government is leveraging its purchasing power to negotiate better deals with big tech firms at a time of heightened scrutiny on public spending. With cloud services representing a significant and growing share of federal IT budgets — the U.S. government spent an estimated $12 billion on cloud and hosting services in 2023, according to Deltek — even modest pricing concessions can translate into substantial taxpayer savings.

While details of the final terms are yet to be disclosed, industry analysts expect the competitive pressure to result in broadly similar discount structures across all major providers, maintaining a level playing field in what has become a critical and lucrative segment of the federal procurement landscape.