"Showing goodwill" to Trump? After Oracle, Google also compromises, offering significant cloud service discounts to the U.S. government

The U.S. government is forcing tech giants to significantly reduce prices for cloud computing and software services. Following Oracle, Google has agreed to provide substantial discounts on cloud services to the government. This wave of price cuts reflects Silicon Valley tech companies' eagerness to repair their relationship with the Trump administration and avoid a repeat of the confrontational situation during his first term.

According to senior officials from the General Services Administration (GSA), Google's cloud service contracts are expected to receive discounts similar to those of Oracle. Oracle agreed last week to offer a 75% discount on certain software contracts for a limited period and to provide "substantial discounts" on its broader cloud computing contracts.

Microsoft Azure and Amazon Web Services (AWS) are also expected to follow suit with equivalent discounts soon, although negotiations with them have not progressed as smoothly as those with Google's parent company, Alphabet. These four companies account for the majority of the government’s annual cloud service spending of over $20 billion.

This move is part of the Trump administration's efforts to cut IT procurement costs, driven by the so-called government efficiency department (Doge), which was previously overseen by Musk. Tech giants hope to avoid a repeat of the confrontational relationship experienced during Trump's first term.

Oracle Takes the Lead with Huge Discounts

Oracle has set a benchmark for government price negotiations. The company reached an agreement last week to offer a 75% discount on certain software contracts for a limited period and to provide "substantial discounts" on cloud computing contracts.

GSA senior officials stated that Google's cloud service contracts "are likely to reach similar levels." Google agreed in April to provide a 71% "temporary discount" on Workspace contracts to the U.S. government, effective until the end of September. The final agreement is expected to be finalized in a few weeks.

The official emphasized, "Each of these companies fully recognizes and understands this mission. We will reach agreements with all four participants."

The GSA's cost-saving efforts are led by Acting Administrator Stephen Ehikian and Federal Procurement Service Commissioner Josh Gruenbaum, responding to a series of executive orders signed by Trump requiring the government to save on federal procurement.

In recent months, the GSA has reached agreements with Adobe and Salesforce. Salesforce has reduced the price of the messaging service Slack used by the government by 90%, effective until the end of November. The agency is also renegotiating federal contracts with ride-hailing companies.

This procurement cost-cutting initiative follows similar actions taken by the Trump administration against consulting groups, including Booz Allen Hamilton and Deloitte.

Tech Giants Compete to Repair Relationships

Tech leaders are actively seeking to mend relationships with Trump.

Meta's Mark Zuckerberg and Google's Sundar Pichai made high-profile appearances at Trump's inauguration and terminated corporate diversification projects.

Bezos is also working to rebuild his relationship with the president, whom he previously criticized as a "democratic threat." In 2019, during Trump's first term, the $10 billion Joint Enterprise Defense Infrastructure (JEDI) cloud project was awarded to Microsoft instead of Amazon. AWS claimed in a lawsuit that Trump "used his power to punish Amazon" due to "personal grievances" against Bezos and The Washington Post Ultimately, the Jedi project was canceled during Biden's term and replaced with a $9 billion contract awarded to Amazon, Google, Microsoft, and Oracle