Google Expected to Offer Cloud Discounts as US Government Pushes for Tech Contract Savings

Google is preparing to offer significant discounts on its cloud computing services to US federal agencies as part of a broader government effort to reduce technology procurement costs.

The move follows similar actions by Oracle, which recently agreed to slash prices on some software and cloud contracts by up to 75% through the end of November.

According to officials at the General Services Administration (GSA), Google’s pending agreement is likely to provide comparable price reductions. The deal, which is still being finalized, is part of a coordinated push under the Trump administration to renegotiate federal IT contracts across the board, including with major cloud providers such as Amazon Web Services (AWS) and Microsoft Azure. Negotiations with those firms are said to be ongoing but not yet as advanced.

“Every single one of those companies is totally bought in,” a senior GSA official said. “We will get there with all four players.”

Together, Amazon, Microsoft, Google, and Oracle provide the vast majority of cloud services to the federal government, which currently spends more than $20 billion annually on cloud computing.

The push for cost reductions is part of a broader federal initiative to streamline government spending, guided by executive orders and supported by the Department of Government Efficiency (DoGE), a now-disbanded office that was previously led by Elon Musk. Similar renegotiations have already resulted in discounts from companies like Adobe and Salesforce, with the latter agreeing to cut the cost of its Slack messaging service for the government by 90% through November.

In April, Google agreed to provide a temporary 71% discount on certain Workspace contracts, a move estimated to potentially save the government up to $2 billion if widely adopted.

The tech industry’s approach to this latest round of negotiations contrasts with past tensions, particularly during Trump’s first term. At that time, Amazon lost a high-profile $10 billion Pentagon cloud contract, known as JEDI, amid allegations of political retaliation related to critical coverage of the administration in the Washington Post, owned by Amazon founder Jeff Bezos.

That contract was ultimately scrapped under the Biden administration and replaced with a new $9 billion Joint Warfighting Cloud Capability agreement awarded to four companies: Amazon, Google, Microsoft, and Oracle.

While Google has not publicly commented on the current negotiations, its participation underscores the willingness of tech firms to cooperate with the government in a climate of fiscal scrutiny and shifting political dynamics. Amazon and Microsoft also declined to comment, and Oracle did not respond to inquiries.

Industry analysts note that the federal government’s focus on lowering IT costs comes at a time when tech companies are facing increasing political and regulatory pressure, and are eager to maintain positive relationships with policymakers.

The Financial Times and Reuters contributed to this report.