AI Giants Offer $1 Deals to Secure Government Foothold
The race among artificial intelligence companies to embed their powerful tools within the United States government has intensified, with leading firms now employing a familiar software industry strategy: offering steep discounts to lure federal users. In recent weeks, both OpenAI and Anthropic have unveiled special pricing for government versions of their generative AI chatbots, ChatGPT and Claude, respectively, while xAI announced its “Grok for Government” initiative in mid-July.
OpenAI and Anthropic are currently making their advanced chatbots available to federal agencies for a nominal price of just $1 for an entire year. Notably, Anthropic appeared to directly challenge OpenAI’s initial announcement by extending its special pricing for Claude to all three branches of government—executive, legislative, and judicial—whereas ChatGPT’s introductory offer is primarily aimed at the executive branch.
This aggressive pricing strategy mirrors a well-established playbook in the enterprise software sector, pioneered by companies like Slack. The goal is to rapidly acquire a large user base by making a service nearly free, with the expectation that once embedded and indispensable, organizations will be compelled to pay significantly higher costs in the future. The potential rewards are substantial, given that the U.S. government allocates over $100 billion annually to IT and cyber-related investments, including software licenses. Indeed, major players like Anthropic, OpenAI, Google, and xAI have already secured contracts potentially worth up to $200 million each to assist in modernizing the U.S. Defense Department. Offering their products at such a low initial cost provides a crucial competitive edge as these companies vie for influence across other government sectors.
Beyond the immediate commercial gains, there’s also a strategic “soft power” benefit at play. By deeply integrating their services into government operations, AI developers could foster familiarity and reliance among federal workers. This widespread adoption might, in turn, subtly influence future regulatory debates, potentially making policymakers more hesitant to impose stringent restrictions on technologies that have become integral to government functions. OpenAI, for instance, explicitly framed its offering as a fulfillment of a “core pillar” of the Trump Administration’s AI Action Plan, emphasizing the goal of empowering federal workers to reduce administrative burdens and focus more on public service. This move highlights a dual objective: not only to secure lucrative long-term contracts but also to shape the very environment in which AI is developed and regulated.