Google will heavily discount cloud computing services for the US government, as the Trump administration pressures technology groups to slash prices on long-standing, lucrative contracts.
The agreement comes after Oracle last week cut a deal with the government, including a 75 per cent discount on some software contracts for a limited period and “substantial discounts” on its wider cloud computing contracts.
Google’s cloud contract is likely “to land in a similar spot”, according to a senior official at the General Services Administration (GSA), which is renegotiating the contracts. A deal is expected to be finalised within weeks.
Equivalent discounts from Microsoft’s Azure and Amazon Web Services (AWS) are expected to follow soon, they said, but those talks are less advanced than with Alphabet, Google’s parent company.
“Every single one of those companies is totally bought in, they understand the mission,” the senior official said. “We will get there with all four players.”
Together the four companies account for the bulk of the government’s annual spend on cloud services, which currently exceeds $20bn a year.
President Donald Trump’s administration has been attempting to slash the cost of IT procurement as part of a government-wide effort championed by the so-called Department of Government Efficiency (Doge), previously run by Elon Musk.
The tech giants are keen to avoid a repeat of the adversarial relationship they had with Trump during his first term, which saw AWS lose a lucrative defence contract.
Amazon claimed the move was retaliation for critical coverage of the administration in the Washington Post, owned by the company’s founder Jeff Bezos.
The push by the GSA, which co-ordinates US government procurement, follows similar efforts by the Trump administration to reduce the amount spent on consulting groups such as Booz Allen Hamilton and Deloitte.
The senior official said the GSA would also be renegotiating agreements with ridesharing companies that have contracts with the federal government.
Google agreed to give the US government a 71 per cent “temporary price reduction” on some Workspace contracts in April, until the end of September. The company declined to comment on the pending cloud deal.
Microsoft declined to comment. Amazon and Oracle did not respond to requests for comment. A spokesperson for GSA declined to comment on the ongoing negotiations.
The agency’s cost-saving effort, spearheaded by acting administrator Stephen Ehikian and Federal Acquisition Service commissioner Josh Gruenbaum, follows a series of executive orders signed by Trump that mandate the government to save money in federal procurement.
In the past few months, the GSA had reached deals with Adobe and Salesforce. The latter company cut the price it charged the government to use the messaging service Slack by 90 per cent until the end of November.
Big Tech leaders including Meta’s Mark Zuckerberg and Google’s Sundar Pichai have courted Trump — appearing prominently at his inauguration and ending corporate diversity programmes.
Bezos has also worked to rebuild his relationship with the president — whom he previously criticised as a “threat to democracy”.
During Trump’s first term, in 2019, the $10bn Joint Enterprise Defense Infrastructure (Jedi) cloud project was awarded to Microsoft instead of Amazon. AWS alleged in a lawsuit that Trump “used his power to ‘screw Amazon’” due to a “highly public personal vendetta” against Bezos and the Washington Post.
Ultimately, Jedi was cancelled under Joe Biden and replaced with a $9bn contract that was awarded to Amazon, Google, Microsoft and Oracle.
Larry Ellison, the billionaire founder of Oracle, has formed a close alliance with Trump. Oracle is involved in talks to split viral video app TikTok’s US business from its Chinese parent ByteDance, and is part of a $100bn US data centre infrastructure project alongside OpenAI.
