April 10 (Reuters) – Google is offering significant discounts on its business software suite to U.S. federal agencies in a bid to leverage the Trump administration’s cost-cutting agenda and challenge Microsoft’s stronghold in the government software sector. This move aligns with President Donald Trump’s initiative to reduce federal expenditures, led by billionaire ally Elon Musk’s Department of Government Efficiency (DOGE) reform team, which aims to cut contracts and downsize agencies.

As part of a new agreement with the U.S. General Services Administration (GSA), Google will offer up to a 71% discount on its Workspace suite. If fully adopted across the government, this could save agencies as much as $2 billion, the company announced on Thursday. The GSA — one of the first agencies impacted by DOGE layoffs — highlighted the deal as a step toward broader cost-saving collaborations with Google and other tech providers. Unlike prior agreements, where individual agencies negotiated separate rates, this new pricing model is based on total government usage, enabling deeper discounts.

These reduced prices, valid through September 30, could help Google gain a stronger foothold in federal software contracts, a market long dominated by Microsoft, which held roughly 85% of the share in 2021 according to Omdia. To strengthen its position, Google has enhanced its Workspace suite with a range of AI features powered by its Gemini language model. Some agencies have already adopted the suite—such as the Air Force Research Laboratory, which has used Google Workspace since 2021.

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