Trump Pushes Google, Amazon, Microsoft To Cut Cloud Prices: $20 Billion IT Budget On Chopping Block As Oracle Sets Precedent: Report

Benzinga
2025.07.11 06:53
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The Trump administration is pressuring major tech companies, including Google, Amazon, and Microsoft, to significantly reduce cloud computing prices for U.S. government contracts worth over $20 billion annually. Following Oracle's precedent-setting deal with 75% discounts, Google is expected to finalize a similar agreement soon. Microsoft and Amazon are anticipated to follow suit, although negotiations are less advanced. This initiative aims to cut IT procurement costs as part of the Department of Government Efficiency, potentially reshaping the cloud services market for federal contracts.

Alphabet Inc.‘s GOOGL GOOG Google division will heavily discount cloud computing services for the U.S. government as the Trump administration pressures technology giants to slash prices on lucrative federal contracts worth more than $20 billion annually.

What Happened: The agreement follows Oracle Corp.‘s ORCL precedent-setting deal that included 75% discounts on some software contracts and substantial reductions on cloud computing services. A senior General Services Administration official told the Financial Times that Google’s cloud contract is likely “to land in a similar spot,” with finalization expected within weeks.

Microsoft Corp. MSFT Azure and Amazon.com Inc.‘s AMZN Amazon Web Services are expected to follow with equivalent discounts, though negotiations remain less advanced than with Google, according to the GSA official. “Every single of those companies is totally bought in, they understand the mission,” the official said. “We will get there with all four players.”

The four cloud providers account for the bulk of the government’s annual $20 billion cloud services spending. President Donald Trump‘s administration is attempting to slash IT procurement costs as part of the Department of Government Efficiency initiative, previously led by Elon Musk.

Why It Matters: Oracle’s recent agreements could generate over $30 billion in yearly revenue by fiscal 2028, according to regulatory filings. Jefferies analysts called the deals a “pivotal moment” in Oracle’s transition to hyperscale cloud status, positioning the company to double its remaining performance obligations while accelerating revenue growth.

Tech leaders, including Meta Platforms Inc.’s META Mark Zuckerberg and Google’s Sundar Pichai have courted Trump, appearing at his inauguration and ending diversity programs. Amazon’s Jeff Bezos has worked to rebuild relationships after Trump’s first term saw AWS lose the $10 billion Joint Enterprise Defense Infrastructure contract to Microsoft in 2019.

Oracle founder Larry Ellison has formed close ties with Trump, participating in TikTok acquisition talks and the $100 billion Stargate AI data center project alongside OpenAI.

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