Google, Microsoft dreams of AI price hikes meet resistance
Recent moves by Microsoft and Google show many business customers are balking at forking over a separate fee each month to give employees access to a work-friendly AI chatbot.
Why it matters: Both companies previously expressed high hopes that businesses would be willing to pay an extra $20 or $30 per employee per month for access to AI tools alongside everyday productivity apps.
Driving the news: Google announced last week that it will include its Gemini Advanced chatbot for subscribers to Workspace, the bundle that includes Gmail and productivity apps like Google Docs and Sheets. Microsoft, meanwhile, announced a free AI option for businesses — Copilot Chat — that offers limited access to Copilot and access to AI-powered agents on a pay-as-you-go basis.
Between the lines: For business leaders, the cost-benefit analysis for this kind of AI deployment is still tricky.
Running a small test to see what a department or team might gain from a specific use case is simple, but we don't yet know how to measure an entire company's gains from widely offering such tools.
What they're saying: Jared Spataro, Microsoft's chief marketing officer for AI at work, told Axios that while some companies are willing to commit to full-scale deployments, others say they need to know ahead of time they can make it pay off.
The big picture: Microsoft's suite of office tools is a mature product that brings in enormous revenue, and Google's is not far behind. Both companies are looking to AI as a lever to grow their income in this otherwise more static market. Investors have been excited, too.
What to watch: The key question is whether these companies have to abandon their hopes of revenue boosts from business chatbots.
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