Google joins Big Tech's rush to give the government discounts

Google is getting ready to offer some major discounts on its cloud computing services for the U.S. government, as the Trump administration turns up the heat on tech companies to cut prices on their long-standing, and very lucrative, contracts.

The deal isn’t official yet, but the Financial Times reports it’s expected to wrap up in the next few weeks. According to a senior official at the General Services Administration (GSA), which oversees federal procurement, Google’s new contract is likely “to land in a similar spot” as Oracle’s recent agreement with the government. Last week, Oracle cut a deal to slash some software contracts by 75% for a limited time, along with “substantial discounts” on its broader cloud services.

Microsoft Azure and Amazon Web Services are also expected to follow suit, though talks with those companies aren’t quite as far along. “Every single of those companies is totally bought in, they understand the mission,” the GSA official said. “We will get there with all four players.”

Together, Google, Amazon, Microsoft, and Oracle account for most of the government’s cloud spending, which now tops $20 billion a year.

Trump wants big tech to slash prices — again

The push for cheaper tech services is part of President Trump’s effort to rein in federal spending. It’s being led by the Department of Government Efficiency — also known as DOGE —which was previously run by Elon Musk. Acting GSA administrator Stephen Ehikian and Federal Acquisition Service commissioner Josh Gruenbaum are leading negotiations, following a series of executive orders aimed at cutting procurement costs across the board.

Google has already given the government a taste of its discounting power. Back in April, it agreed to a 71% “temporary price reduction” on some Workspace contracts through the end of September. Salesforce also jumped in, cutting the price of Slack for government use by 90% until the end of November, and Adobe agreed to lower its rates as well.

The administration isn’t stopping with tech. Officials are also looking to renegotiate deals with consulting firms like Booz Allen Hamilton and Deloitte, and even rideshare companies that have government contracts.

Trying to avoid old grudges

Tech giants are eager to keep things friendly with Trump this time around. During his first term, Amazon famously lost out on the $10 billion JEDI defense cloud contract to Microsoft—a move Amazon later said was retaliation for negative coverage of Trump in The Washington Post, which Jeff Bezos owns.

That contract was eventually scrapped under President Biden and replaced with a $9 billion deal that went to Amazon, Microsoft, Google, and Oracle.

Since Trump returned to office, Big Tech leaders have been making efforts to smooth over past tensions. Google’s Sundar Pichai and Meta’s Mark Zuckerberg both attended his inauguration, and several companies have ended corporate diversity programs that previously drew conservative criticism. Even Bezos, who once called Trump a “threat to democracy,” has been working to rebuild the relationship.

Meanwhile, Oracle’s billionaire founder Larry Ellison has remained close with Trump. Oracle is currently involved in talks to separate TikTok’s U.S. operations from its Chinese parent, ByteDance, and is part of a massive $100 billion U.S. data center project alongside OpenAI.