Microsoft and Google Revamp AI Productivity Tool Pricing, Intensifying Competition

Microsoft and Google roll out new pricing for their AI productivity tools

Microsoft and Google roll out new pricing for their AI productivity tools Microsoft Corp. and Google LLC today revamped the pricing of the generative artificial intelligence features built into their respective productivity suites. The changes are part of an effort on the companies' part to boost the adoption of their AI tools among business users. Microsoft ships an AI assistant called Copilot as part of its Microsoft 365 productivity suite. Google, in turn, offers the Gemini machine learning feature bundle to users of its rival Workspace suite. The flagship AI offering in Microsoft 365 is an add-on called Microsoft 365 Copilot that costs $30 per user per month. The company also provides a free tier of the add-on with more limited capabilities. One of the main differences between the two is that whereas the paid edition embeds an AI assistant directly into Microsoft 365 applications such as Word, the free tier doesn't. Today, Microsoft rolled out a new version of the add-on's free tier called Microsoft 365 Copilot Chat. The main change is that users can now create AI agents, custom AI tools capable of automatically performing business tasks. This capability was previously only available in the paid add-on. AI agents can be created with natural language prompts in a tool called Copilot Studio. A marketing team, for example, could build an agent that extracts key details from ad campaign performance data. Customer service teams can use the feature to automatically generate responses to common user inquiries. Microsoft will bill agents based on a usage metric called messages. Each user prompt that Copilot Studio processes using a large language model counts as two messages, while prompts sent to a less advanced AI use one message apiece. Requests that require an agent to analyze a company's business files using the Microsoft Graph feature in Microsoft 365 will consume 30 messages. If a company opts for pay-as-you-go billing, each message costs one cent. Organizations can also purchase prepaid agent packs that cost $200 and provide 25,000 messages per month. "Answers are charged for every agent response, not for user prompts," Richard Riley, the general manager of Microsoft's Power Platform business, wrote in a blog post. "As makers build agents, they can define conversational topics, create branching logic flows, and apply generative AI to create responses based on knowledge sources." The debut of Microsoft 365 Copilot Chat today coincided with an update to Gemini, the AI toolkit that Google ships with its Workspace productivity suite. The latter upgrade is likewise designed to expand the AI features' adoption among business users. The update is rolling out to the Business and Enterprise tiers of Workspace. Until now, accessing the full lineup of Gemini features required buying an add-on priced at $20 per user month. With today's update, Google is removing that requirement. It will make the full Gemini feature set available out of the box with all Business and Enterprise subscriptions, which will cost $2 more per user per month going forward. Customers of the two Workplace plans already had access to a limited version of Gemini. This version lacked a sidebar that allows users to interact with the AI directly from the interface of Workspace apps such as Drive. With today's update, customers with Business and Enterprise plans will gain access to the sidebar. There are also other enhancements. According to 9to5Mac, customers who used the free, limited version of Gemini will be upgraded to a more capable LLM called Gemini Advanced with 1.5 Pro. They will also receive access to an AI agent creation tool called Gems and NotebookLM, a note-taking app that doubles as a research tool. "By removing the need to pay for an add-on to access our latest generative AI capabilities, we're simplifying our plans and pricing to bring the added value of Google AI to all Workspace customers," Jerry Dischler, Google's president of cloud applications, wrote in a blog post.

Microsoft launches Copilot Chat with AI agents; take that, Gemini!

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More Microsoft has been positioning Copilot as the "UI for AI." The company has already launched several variants of the GPT-4o-powered assistant for business and personal users. Now, as the next step in this work, it is launching Microsoft 365 Copilot Chat -- a rebranded version of its free AI chat experience for businesses, enhanced with agentic capabilities. Available starting today, the offering is designed to give businesses an easy way to explore most, if not all, of the capabilities of the more full-featured Microsoft 365 Copilot, which is priced at $30 per user per month. Although the experience is free, there is a notable caveat: The agentic capabilities promising task automation will work only on a consumption-based model. The goal here is pretty obvious: Microsoft wants to give its commercial customers a taste of what it has on offer in the paid version of Copilot. If, with powerful features like agents, the company can make using Copilot a daily habit of Microsoft 365 users -- from customer service representatives to marketing leads to frontline technicians -- those users might eventually turn to the paid plan. This development is not a surprise given that the rollout of Microsoft 365 Copilot has been reported to be far from perfect, with some enterprises describing it as expensive and complex to implement due to security concerns. For its part, Google continues to move ahead with Gemini for Workspace, positioning it as an affordable, easily accessible AI for work. What to expect from Microsoft 365 Copilot Chat Just like the original version, Microsoft 365 Copilot Chat will continue to have a chat interface, where users will be able to input their queries and get answers from AI. The model under the hood, GPT-4o from OpenAI, will provide information grounded in the web, allowing users to do market research or prepare strategy documents. It even supports file uploads, enabling users to seek summaries, analyses or suggestions from documents, and image generation for use cases like social media marketing. But the real deal is support for AI agents. IT admins can now use Copilot Studio to build domain-specific agents and make them available to employees via Microsoft 365 Copilot Chat. These agents can serve as virtual teammates for employees, helping them automate repetitive tasks, from providing customer information before meetings to monitoring relevant events. They can be grounded using data from the web as well as work data either via Microsoft Graph or third-party graph connectors. "A customer service representative can ask a customer relationship management (CRM) agent for account details before a customer meeting, while field service agents can access step-by-step instructions and real-time product knowledge stored in SharePoint," Microsoft notes in a blog post. By providing access to agents within Microsoft 365 Copilot Chat, Microsoft wants to show businesses the value its AI offerings can bring. However, this experience will not be entirely free. The agents will be accessible on a consumption-based model, with the total usage being determined according to the number of messages used by an organization. "You can purchase messages though the Copilot Studio meter in Microsoft Azure, a pay-as-you-go option, for $0.01/message, or via pre-paid message packs priced at $200 for 25,000 messages/month," the company notes in a separate post. It's worth noting here that different kinds of interactions will use up messages differently, with Microsoft Graph-based answers taking up as many as 30 messages or 30 cents. Taking on Gemini dominance With this move, Microsoft hopes to squeeze some money out of Microsoft 365 users with basic AI needs while creating an opportunity to convert them into paying customers. It also comes as a counter to Google's push with the Gemini assistant The Sundar Pichai-led company has just announced that Gemini will be available for free within its Workspace apps, including Gmail, Docs, Sheets, Meet, Chat and Vids. This integration is offered to Workspace Business and Enterprise customers, meaning companies paying a base price of $14 per user per month will gain access to AI features inside their core applications. In contrast, Microsoft 365 users must subscribe to the full Copilot version, priced at $30 per user per month, to access AI features within apps like Teams, Outlook, Word, Excel and PowerPoint. But Microsoft differentiates itself by offering usage-based agentic AI capabilities. This allows businesses to create custom agents for task automation -- a feature currently absent in Gemini. Ultimately, the choice comes down to the ecosystem you're aligned with and your specific needs. Google's approach enables easy access to Gemini within essential business apps but lacks agentic capabilities for now. Meanwhile, Microsoft 365 provides web-based chat and agentic features (on a pay-as-you-go model) but requires a higher investment to unlock AI functionality within its work apps.

Google Pressures Microsoft 365 By Adding Gemini To Workspace For (Mostly) Free

On February 2024, I wrote a blog post declaring "You're not switching to Google Workspace to use Gemini -- yet." Google aims to change that. Today, the company announced that it will include "the best of Google AI in Workspace Business and Workspace Enterprise plans" without the need to purchase an add-on. (Previously, Gemini for Workspace plans cost $20/user/month.) Google will now go to market with Workspace as a fully genAI-enabled productivity and collaboration suite, in contrast to Microsoft's $30/user/month Microsoft 365 Copilot add-on. Google will raise its Workspace price, nominally, from $12/user/month to $14/user/month. Workforce Generative AI Can Be A Feature, Not A Product Driving higher productivity with generative AI has been no easy task. Approaches that embed genAI directly into the flow of work, like Microsoft 365 Copilot and Google Workspace, see higher usage than solutions that require employees to switch between applications. (Who wants to compose an email in a separate browser window, then cut and paste?) But until Google's announcement, embedded solutions required expensive add-on licenses. Google's bold move here: Google Workspace Belongs In Some Purchasing Discussions Yesterday, we released a new report, How To Build A Pragmatic Microsoft 365 Copilot Program, in which we argue that making Copilot valuable faces numerous obstacles, from measuring ROI to technical and performance challenges to a high employee training burden that isn't being met. So M365 Copilot has vulnerabilities. But Workspace does, too; the training burden applies equally to employees using Gemini features, for example. It's likely still not time for you to switch from Microsoft 365 to Google Workspace. But we also believe that: Next Steps For You? Let's Talk You should consider Workspace if you are: 1) a startup (companies starting from scratch with little Microsoft legacy are more likely to adopt); 2) an SMB (small and medium businesses need fewer features and are more price-sensitive); 3) willing to segment your workforce (specific departments might benefit, even if the rest of the company uses Microsoft 365); and/or 4) in need of specific Google innovations, like Vids or NotebookLM. But regardless of whether you are already knee-deep in M365 Copilot, considering Workspace, or still haven't jumped into any of these tools, your next steps will depend on your resources, needs, and AI readiness. Reach out to schedule a guidance session with me, and let's get you where you need to go.