Google nears deal to discount cloud computing for U.S. government

Google is nearing a deal to heavily discount its cloud computing services for the U.S. federal government, as the Trump administration accelerates efforts to rein in technology procurement costs across federal agencies. 

The move aligns with the campaign by President Donald Trump’s Department of Government Efficiency (DOGE) to reduce federal IT expenditure, currently estimated to exceed $20 billion annually.

According to a senior official at the General Services Administration (GSA), which oversees federal procurement, Google’s forthcoming discount is expected to match or closely mirror the terms offered last week by Oracle, which slashed some of its software licensing fees by 75% and provided substantial reductions on cloud services through the end of November.

Discounts with precedent

“Every single one of those companies is totally bought in—they understand the mission,” the GSA official reportedly told the Financial Times. “We will get there with all four players.”

The forthcoming cloud agreement builds on an earlier arrangement between Google and the federal government. In April, Alphabet, Google’s parent company, agreed to a 71% “temporary price reduction” on its Workspace suite, including Gmail, Docs, and Meet, through September 30.

The agency has already secured similar cost-cutting deals with Salesforce and Adobe. Talks with Microsoft’s Azure and Amazon Web Services (AWS), which together with Google and Oracle make up the “Big Four” of government cloud vendors, are ongoing but said to be less advanced.

Cost-saving mandate comes from the top

The latest round of procurement reform is part of an initiative driven by a series of executive orders signed by President Trump since his return to office earlier this year.

Tasked with maximizing efficiency and cutting nonessential government spending, DOGE, led at the beginning by Elon Musk, has turned its attention to the technology sector, which has long been criticized for opaque and bloated pricing in federal contracts.

For the cloud giants, the pressure to cooperate is not only financial but political.

During Trump’s first term, tensions between the White House and Silicon Valley reached a boiling point when Amazon lost the $10 billion Joint Enterprise Defense Infrastructure (JEDI) contract to Microsoft. AWS later alleged that Trump’s personal animus toward Amazon founder Jeff Bezos and his ownership of the Washington Post, a journal that was traditionally critical of Trump, influenced the president’s decision.

However, the President Joe Biden administration later canceled the JEDI project and replaced it with a $9 billion contract split among Amazon, Microsoft, Google, and Oracle, the scars remain.

Tech leaders are wiser this time around, making visible efforts to avoid conflicts and rebuild relations with the current administration.

Mark Zuckerberg and Google CEO Sundar Pichai both appeared prominently at Trump’s second inauguration, while Amazon has taken steps to soften its tone on federal matters. Bezos, once a vocal critic of Trump, has since praised recent efficiency reforms as “a necessary shift in how Washington spends.”

Larry Ellison, Oracle’s billionaire founder, has also become a Trump ally in several endeavors. He advocated for the president’s re-election. He has also worked alongside the administration on key projects, including a proposed $100 billion domestic data center initiative and the controversial effort to divest TikTok’s U.S. operations from its Chinese parent company, ByteDance.

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