Microsoft Offers Massive Discounts to US Government in AI-Driven Cloud Services Deal

Microsoft wants to give US government Copilot for free

Microsoft, the latest tech firm to agree to big software discounts for the US government, is digging even deeper into its bargain bin than the competition by offering a year of free Copilot access to government agencies willing to put up with its other problem products. The General Services Administration (GSA) announced its new deal with Microsoft on Tuesday, describing it as a "strategic partnership" that could save the federal government as much as $3.1 billion over the next year. The GSA didn't mention specific discount terms, but it said that services, including Microsoft 365, Azure cloud services, Dynamics 365, Entra ID Governance, and Microsoft Sentinel, will be cheaper than ever for feds. That, and Microsoft's next-gen Clippy, also known as Copilot, is free to access for any agency with a G5 contract as part of the new deal, too. That free price undercuts Google's previously cheapest-in-show deal to inject Gemini into government agencies for just $0.47 for a year. The GSA made this Microsoft deal as part of its OneGov initiative, which seeks to centralize purchasing of products and services used across the government under a single contract. While the agency intends for OneGov to extend across the federal government, the first phase of the program focuses exclusively on IT contracts. Though it only announced OneGov in April, the GSA has awarded contracts under the plan at a rapid pace, with Oracle the first firm to sign a deal in July. That agreement includes a 75 percent discount on its products to government agencies. The agency wrote many of the other OneGov contracts to get AI products into the hands of government agencies. OpenAI and Anthropic both made deals with the GSA in August to provide a year of their services to agencies for $1 each, which Google undercut later last month. Even Box made an AI discount deal with the federal government, though it didn't disclose pricing. Outside of AI offerings, Amazon Web Services inked its own OneGov deal with the GSA to offer discounted cloud services through 2028. With the exception of AWS, all the other OneGov deals that have been announced so far have a very short shelf life, with most expirations at the end of 2026. Critics of the OneGov program have raised concerns that OneGov deals have set government agencies up for a new era of vendor lock-in not seen since the early cloud days, where one-year discounts leave agencies dependent on services that could suddenly become considerably more expensive by the end of next year. Nicholas Chaillan, former US Air Force and Space Force chief software officer and founder of AI firm Ask Sage, told The Register in a recent conversation that he's protested the OpenAI, Anthropic, and Google deals, accusing the GSA of undermining its own rules on fair and open competition for government-wide contracts. "Pricing this low is not about serving agencies - it's about forcing dependence on a single vendor, hiding future costs, and squeezing out fair competition," Chaillan told us in an email. "What looks cheap today will leave the government with higher costs, fewer options, and greater risk tomorrow." Chillain told us that GSA hasn't made the OneGov contracts public so they could be scrutinized for any unfair elements. We've tried obtaining copies but the GSA hasn't acknowledged those requests. As with the other OneGov contracts, what happens to the discounts after the September 2026 end of the offering isn't clear. The GSA's press release mentioned that discounted pricing will be available for "certain products" for up to 36 months, but the terms of those discounts or the specific products available weren't mentioned. Microsoft's announcement of its new OneGov deal said those extended discounts will save the government as much as $6 billion over three years. The GSA didn't respond to questions for this story. Like other tech giants making OneGov deals, Microsoft will likely have to burn some capital to reap the monetary rewards from government agencies who grow dependent on its cheap or free software in the next year. Unlike those other tech giants making OneGov deals, however, Microsoft is yet again being rewarded by the US government with a pathway to profit after making a massive national security mistake. It was mere days ago that we reported on the Pentagon's decision to formally bar Microsoft from using China-based engineers to support sensitive cloud services deployed by the Defense Department, a practice Defense Secretary Pete Hegseth called "mind-blowing" in a statement last week. Then there was last year's episodes that allowed Chinese and Russian cyber spies to break into Exchange accounts used by high-level federal officials and steal a whole bunch of emails and other information. That incident, and plenty more before it, led former senior White House cyber policy director AJ Grotto to conclude that Microsoft was an honest-to-goodness national security threat. None of that has mattered much, as the feds seem content to continue paying Microsoft for its services, despite wagging their finger at Redmond for "avoidable errors." When it comes to government customers, using China-based support staff isn't Microsoft's only sin. The company had a Sharepoint zero-day that it only "partially" addressed with July security updates. Suspected state-backed hackers used that vuln to target an unspecified "major western government," per the company. That, senior cybersecurity and counterterrorism advisor for the Clinton and Bush II administrations Roger Cressey told us last month, is among the reasons he considers Microsoft to be a continual gift to America's foreign adversaries, as the Sharepoint issue is just "the latest episode of a decades-long process of Microsoft not taking security seriously." "The Chinese are so well prepared and positioned on Microsoft products that in the event of hostilities, we know for a fact that Chinese actors will target our critical infrastructure through Microsoft," Cressey told us in an interview last month. When asked what it had done to improve its security posture, Microsoft declined to answer any of our questions directly, instead pointing us to its press release about today's GSA deal, specifically its section on security. Agencies are safe to adopt Microsoft software, the company said, because "these services have already achieved key FedRAMP security and compliance authorizations." FedRAMP is the government's security approval process for cloud software. "Microsoft 365, Azure and our key AI services are authorized at FedRAMP High," the company statement says. "Microsoft 365 Copilot received provisional authorization from the US Department of Defense, with FedRAMP High expected soon."

Microsoft to discount cloud services for US government

WASHINGTON, Sept 2 (Reuters) - Microsoft has agreed to give U.S. agencies a discount on its cloud services, the General Services Administration said Tuesday, as part of the administration's push to sign deals with tech companies for departments across the executive branch. The deal will save the U.S. government up to $3 billion in the first year, according to GSA and Microsoft. Reuters could not immediately verify that figure. As part of the agreement, the company will offer free access to Microsoft Copilot, its generative AI chatbot, to existing federal government users, according to the company, opens new tab. Agencies can also get lower prices on cloud products such as Microsoft Sentinel and Azure Monitoring. Agencies can opt in to the offer through Sept. 2026, according to GSA. GSA, the agency responsible for signing government-wide deals with vendors, has announced similar deals in recent weeks. The agency in August announced that cloud competitors Google and Amazon Web Services had agreed to discounts. The goal is to offer commercial AI tools across the federal government, according to GSA. Reporting by Courtney Rozen Editing by Peter Graff Our Standards: The Thomson Reuters Trust Principles., opens new tab

Microsoft offers U.S. government over $6 billion in savings on cloud services over 3 years

President Donald Trump shakes hands with Microsoft CEO Satya Nadella during an American Technology Council roundtable at the White House in Washington on June 19, 2017. Microsoft has agreed to give the U.S. General Services Administration $3.1 billion in potential savings over the course of a year on cloud services used at government agencies. Since President Donald Trump's return to the White House in January, the GSA has sought to aggregate spending through a strategy called OneGov that's meant to lower prices. Adobe, Amazon, Google and Salesforce have already come forward with discounts. Agencies have to buy through the GSA to take advantage of the Microsoft savings through September 2026. The lower prices will be available for three years, resulting in total savings of over $6 billion, Microsoft said. The discounts apply to Microsoft's Office productivity subscriptions, as well as Azure cloud infrastructure, Dynamics 365 business applications and Sentinel cybersecurity software. Microsoft is throwing in a year of free access to the Copilot artificial intelligence assistant for millions of workers with Microsoft 365 G5 subscriptions, the company said. Agencies can easily switch to the lower price, said Josh Gruenbaum, who left his director position at private equity firm KKR to become commissioner of the GSA's Federal Acquisition Service after Trump's second term began. The GSA oversees about $110 billion in spending on common goods and services from many agencies, out of about $450 billion in total spending across the federal government, Gruenbaum said in an interview. The GSA is working to absorb procurement for NASA and the National Institutes of Health, to comply with an executive order Trump signed in March, Gruenbaum said. Around $80 billion in spending is tied to IT, and Microsoft's annual U.S. government revenue probably stands in the mid- to high-single-digit billions of dollars, Gruenbaum said. "It's no surprise that Microsoft is one of the most critical partners for the federal government in terms of its software and the tooling that we use around both the civilian side and the defense side," Gruenbaum said. Gruenbaum said he spoke numerous times about the deal with Microsoft CEO Satya Nadella. "I think the biggest piece is he wants to partner with this administration and get this right for AI adoption," Gruenbaum said of Nadella. "But I also think he wants to go and take market share from some of the other tools and services that are out there."

Microsoft is gifting the US Government $6 billion worth of Office and 365 software savings

* GSA OneGov scheme lands the US Government huge Microsoft savings * The White House could save $3.1 billion in year one alone * Microsoft 365, Copilot and more are all on the cards Microsoft has signed a $6 billion OneGov agreement with the General Services Administration (GSA) to give the US Government access to heavy discounts across its software. $6 billion in savings across three years will kick off with an estimated $3.1 billion in savings during year one, with the White House securing discounts across Microsoft 365 (G3 and G5), Microsoft 365 Copilot, Azure Cloud Services, Dynamics 365, Microsoft Sentinel, Azure Monitoring, Entra ID Governance and further cybersecurity tools. CVP for US Public Sector Industries Chris Barry announced the discounts, designed to benefit the American people through huge productivity and efficiency gains. Microsoft gives the US Government more "steep discounts" "With this new agreement with the U.S. General Services Administration, including a no-cost Microsoft 365 Copilot offer, we will help federal agencies use AI and digital technologies to improve citizen services, strengthen security, and save taxpayers more than $3 billion in the first year alone," Microsoft CEO Satya Nadella said. Microsoft described its deal as a five-pillar strategy: using AI to boost productivity; upping automation with AI agents; accelerating US cloud modernization; streamlining government operations; and enhancing cybersecurity. Redmond has given federal agencies the month of September to opt in to any or all of its offerings, with discounted pricing set to last up to three years. Microsoft isn't the only company offering huge discounts for US federal agencies. Google also recently set a 71% price reduction on its Google Workspace packages, with a price cap of $0.47 on AI tools under the Gemini for Government portfolio. Both deals align with Trump's AI Action Plan, which aims to reduce regulatory barriers for AI adoption while simultaneously boosting US semiconductor manufacturing to keep up with increased demand.

Microsoft joins Google in a federal cloud price war

For Microsoft, the price of admission to Washington's AI future is a discount. On Tuesday, the General Services Administration (GSA) announced a OneGov agreement with Microsoft that slashes prices across Microsoft 365, Copilot, Azure, Dynamics, and security tools -- a package GSA says could save agencies about $3.1 billion in year one, with Copilot free for up to 12 months for G5 government customers. Agencies can opt in through September 2026, and some discounts run as long as 36 months. But deals like this don't happen out of civic duty. Microsoft is following the money -- and protecting its moat. A federal seat today often means thousands of seats tomorrow as adoption ripples across agencies. The discounts buy loyalty, not efficiency. Once Copilot is baked into daily workflows, renewal pricing won't be voluntary; it'll be unavoidable. Google has played the same card. Less than two weeks ago, GSA announced a "Gemini for Government" package with Google that pairs AI services and cloud at deeply discounted rates. That deal follows a separate, headline-grabbing cut earlier in 2025: a 71% reduction on Google Workspace for federal agencies, with reported potential savings in the billions. The competitive context is shifting in real time. Amazon Web Services inked its own government-wide arrangement in August, offering up to $1 billion in credits for cloud services, modernization support, and training through 2028. Earlier reporting said Oracle was dangling steep concessions -- as much as 75% off on license-based software and substantial cloud discounts -- raising the competitive floor for everybody else. Even OpenAI struck a OneGov agreement, offering federal agencies ChatGPT Enterprise for just $1 per agency for the first year, part of both OpenAI and Anthropic's attempts to position their AI services within government channels. And Adobe, Box, and DocuSign have rushed to join the OneGov program, slashing their e-signature and content-management stacks by 65-70%. The signs are there that Washington might be forcing an old-fashioned price war in the most modern corner of IT. For hyperscalers, it's not about giving the government a bargain. It's about seeding dependence in practically the only customer on earth who doesn't churn. "As GSA seeks to transform government in this new era of AI, Microsoft is committed to leading as the government's essential partner in delivering the tools necessary to help federal agencies harness the power of AI to advance the public good," Chris Barry, Microsoft's corporate vice president of U.S. Public Sector Industries, said in a press release. Under Microsoft's terms, agencies get more than office software price relief. The OneGov bundle spans monitoring and security (Microsoft Sentinel, Azure Monitoring) and identity governance (Entra ID Governance). The structure is intentionally turnkey: standardized terms, unified pricing, and on-ramp workshops so agencies can deploy fast rather than renegotiate one-off deals. It's the OneGov strategy working as designed -- centralize demand, wring out cost, and move AI from pilot to production. "For more than four decades, Microsoft has partnered with the U.S. Government to serve the American people," Satya Nadella, Microsoft's chairman and CEO, said in the press release. "With this new agreement ... we will help federal agencies use AI and digital technologies to improve citizen services, strengthen security, and save taxpayers more than $3 billion in the first year alone." Federal agencies have struggled to fund AI without raiding line items elsewhere. Bulk, time-limited pricing gives CFOs cover to stand up copilots and agentic workflows across tens of thousands of seats while staying inside budget. The broader OneGov push -- backed by an April policy shift to consolidate and standardize IT buying -- tilts the field away from bespoke contracts and toward platform plays with clear, government-wide price curves. That's great for agencies trying to modernize; it's also a high-stakes customer-acquisition bet for vendors hoping discounted seats convert to sticky, full-freight usage later. President Donald Trump's policies have turned the screw on Big Tech even further. His AI Action Plan, rolled out in July, directed agencies to adopt AI at speed while bulldozing regulatory obstacles. The White House tied budgets to "AI-friendly" policies, making it clear that holdouts risk losing funding. That's a convenient backdrop for GSA to announce headline savings -- with discounts serving as both carrot and stick. Meanwhile, the administration has blurred the line between industrial policy and direct ownership. In August, Washington acquired a 10% stake in Intel through a CHIPS Act package, an unprecedented move that puts taxpayers directly on the hook for Intel's turnaround. At the same time, Trump announced a (still in the works) revenue-sharing deal with Nvidia and AMD that lets certain AI chips flow to China in exchange for a 15% U.S. cut -- a strange mix of protectionism and profiteering. And looming in the background is the so-called Stargate Project -- a $500 billion multiyear moonshot, pitched as America's answer to China's state-backed AI buildout. OpenAI, Oracle, and SoftBank are supposedly in the mix. OpenAI recently landed its first real Pentagon contract -- a $200 million, one-year deal to pilot "frontier AI" across defense operations and back-office workflows. The Pentagon gets early access to cutting-edge models at scale; OpenAI gets a beachhead in one of the only customer bases with both unlimited data and unlimited budgets. Zoom out, and the OneGov deals Washington is cutting are as much about market share as modernization. The federal cloud and productivity stack is a once-in-a-decade land grab. Price is the headline; annuity revenue is the footnote. If OneGov keeps driving unified terms while AWS, Microsoft, and Google jockey for incentives, the cost of entry drops -- and the switching costs rise (later). For now, the scoreboard is simple: Google set the tone with aggressive Workspace and AI pricing; Microsoft matched with a multiproduct bundle and a Copilot teaser; AWS put a giant credit pool on the table. Washington -- often a punchline for paying more -- may have learned how to haggle. But in cloud and AI, the first taste is always cheap. The real bill comes later.

Microsoft to discount cloud services for US government - The Economic Times

As part of the agreement, the company will offer free access to Microsoft Copilot, its generative AI chatbot, to existing federal government users, according to the company. Agencies can also get lower prices on cloud products such as Microsoft Sentinel and Azure Monitoring.Microsoft has agreed to give US agencies a discount on its cloud services, the General Services Administration said Tuesday, as part of the administration's push to sign deals with tech companies for departments across the executive branch. The deal will save the US government up to $3 billion in the first year, according to GSA and Microsoft. Reuters could not immediately verify that figure. As part of the agreement, the company will offer free access to Microsoft Copilot, its generative AI chatbot, to existing federal government users, according to the company. Agencies can also get lower prices on cloud products such as Microsoft Sentinel and Azure Monitoring. Agencies can opt in to the offer through Sept. 2026, according to GSA. GSA, the agency responsible for signing government-wide deals with vendors, has announced similar deals in recent weeks. The agency in August announced that cloud competitors Google and Amazon Web Services had agreed to discounts. The goal is to offer commercial AI tools across the federal government, according to GSA.

Microsoft Secures US Government Cloud Service Deal, Promises $6 Billion In Savings Over 3 Years: Report - Adobe (NASDAQ:ADBE), Amazon.com (NASDAQ:AMZN)

Microsoft Corp. MSFT has agreed to provide the U.S. General Services Administration with potential savings of $3.1 billion over a year on cloud services used by government agencies Microsoft Offers $6 Billion In Savings On Cloud, Office, AI tools Microsoft announced that the savings, totaling over $6 billion over three years, will apply to its Office productivity subscriptions, Azure cloud services, Dynamics 365 business applications, and Sentinel cybersecurity software, CNBC reported on Tuesday. Check out the current price of MSFT stock here. Agencies will also get one year of complimentary access to the Copilot AI assistant for millions of Microsoft 365 G5 users. Josh Gruenbaum, Commissioner of the GSA's Federal Acquisition Service, confirmed that the discounted rates are readily available. To benefit from the Microsoft savings, agencies must purchase through the GSA until September 2026. "It's no surprise that Microsoft is one of the most critical partners for the federal government in terms of its software and the tooling that we use around both the civilian side and the defense side," said Gruenbaum. Microsoft's annual U.S. government revenue is estimated to be in the mid- to high-single-digit billions of dollars, with around $80 billion in spending linked to IT, as per the publication. See Also: Silver Breaks $40, US Market Stands Apart In Global Demand Tech Giants Expand AI And Cloud Access For US Federal Agencies This move by Microsoft comes at a time when other tech giants are also making significant inroads into the U.S. government sector. Since President Donald Trump returned to the White House in January, the GSA has been pursuing a spending consolidation initiative called OneGov, aimed at reducing costs. Companies including Adobe ADBE, Amazon.com AMZN, Google GOOG GOOGL, and Salesforce CRM have already offered discounts. In August, OpenAI CEO Sam Altman secured a partnership with the U.S. GSA, providing federal agencies access to the company's leading AI models through ChatGPT Enterprise for $1 per agency for the next year. Prior to that, Oracle Corporation ORCL announced substantial price reductions for its database software and cloud-computing services for government agencies in July. According to Benzinga Edge Stock Rankings, Microsoft has a growth score of 97.74% and a momentum rating of 79.42. Click here to see how it compares to other leading tech companies. Read Next: Satya Nadella Says These Microsoft Copilot Prompts Now Run His Schedule, Prep Meetings And Even Flag Risks, Shares 5 Examples Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. ADBEAdobe Inc$349.20-2.10%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum11.78Growth62.19Quality32.73Value20.65Price TrendShortMediumLongOverviewAMZNAmazon.com Inc$223.85-2.25%CRMSalesforce Inc$254.13-0.83%GOOGAlphabet Inc$208.99-2.13%GOOGLAlphabet Inc$208.40-2.12%MSFTMicrosoft Corp$499.47-1.42%ORCLOracle Corp$220.56-2.46%Market News and Data brought to you by Benzinga APIs

Microsoft to discount cloud services for US government

WASHINGTON (Reuters) -Microsoft has agreed to give U.S. agencies a discount on its cloud services, the General Services Administration said Tuesday, as part of the administration's push to sign deals with tech companies for departments across the executive branch. The deal will save the U.S. government up to $3 billion in the first year, according to GSA and Microsoft. Reuters could not immediately verify that figure. As part of the agreement, the company will offer free access to Microsoft Copilot, its generative AI chatbot, to existing federal government users, according to the company. Agencies can also get lower prices on cloud products such as Microsoft Sentinel and Azure Monitoring. Agencies can opt in to the offer through Sept. 2026, according to GSA. GSA, the agency responsible for signing government-wide deals with vendors, has announced similar deals in recent weeks. The agency in August announced that cloud competitors Google and Amazon Web Services had agreed to discounts. The goal is to offer commercial AI tools across the federal government, according to GSA. (Reporting by Courtney RozenEditing by Peter Graff)