Google Uses a Blue Light Special for the US Government (Sorry K-Meta You Lose)

August 27, 2025

Dino 5 18 25No AI. Just a dinobaby working the old-fashioned way.

I read an interesting news item in Artificial Intelligence News, a publication unknown to me. Like most of the AI information I read online I believe every single word. AI radiates accuracy, trust, and factual information. Let’s treat this “real” news story as actual factual. To process the information, you will want to reflect on the sales tactics behind Filene’s Basement, K-Mart’s blue light specials, and the ShamWow guy.

The US Federal Government Secures a Massive Google Gemini AI Deal at $0.47 per Agency” reports:

Google Gemini will soon power federal operations across the United States government following a sweeping new agreement between the General Services Administration (GSA) and Google that delivers comprehensive AI capabilities at unprecedented pricing.

I regret I don’t have Microsoft government sales professional or a Palantir forward deployed engineer to call and get their view of this deal. Oh, well, that’s what happens when one gets old. (Remember. For a LinkedIn audience NEVER reveal your age. Okay, too bad LinkedIn, I am 81.)

It so happens I was involved in Year 2000 in some meetings at which Google pitched its search-and-retrieval system for US government wide search. For a number of reasons, the Google did not win that procurement bake off. It took a formal protest and some more meetings to explain the concept of conforming to a Statement of Work and the bid analysis process used by the US government 25 years ago. Google took it on the snout.

Not this time.

By golly, Google figured out how to deal with RFPs, SOWs, the Q&A process, and the pricing dance. The write up says:

The “Gemini for Government” offering, announced by GSA, represents one of the most significant government AI procurement deals to date. Under the OneGov agreement extending through 2026, federal agencies will gain access to Google’s full artificial intelligence stack for just US$0.47 per agency—a pricing structure that industry observers note is remarkably aggressive for enterprise-level AI services.

What does the US government receive? According to the write up:

Google CEO Sundar Pichai characterized the partnership as building on existing relationships: “Building on our Workspace offer for federal employees, ‘Gemini for Government’ gives federal agencies access to our full stack approach to AI innovation, including tools like NotebookLM and Veo powered by our latest models and our secure cloud infrastructure.”

Yo, Microsoft. Yo, Palantir. Are you paying attention? This explanation suggests that a clever government professional can do what your firms do. But — get this — at a price that may be “unsustainable.” (Of course, I know that em dashes signal smart software. Believe me. I use em dashes all by myself. No AI needed.)

I also noted this statement in the write up:

The $0.47 per agency pricing model raises immediate concerns about market distortion and the sustainability of such aggressive government contracting. Industry analysts question whether this represents genuine cost efficiency or a loss-leader strategy designed to lock agencies into Google’s ecosystem before prices inevitably rise after 2026. Moreover, the deal’s sweeping scope—encompassing everything from basic productivity tools to custom AI agent development—may create dangerous vendor concentration risks. Should technical issues, security breaches, or contract disputes arise, the federal government could find itself heavily dependent on a single commercial provider for critical operational capabilities. The announcement notably lacks specific metrics for measuring success, implementation timelines, or safeguards against vendor lock-in—details that will ultimately determine whether this represents genuine modernization or expensive experimentation with taxpayer resources.

Several observations are warranted:

  1. Google has figured out that making AI too cheap to resist appeals to certain government procurement professionals. A deal is a deal, of course. Scope changes, engineering services, and government budget schedules may add some jerked chicken spice to the bargain meal.
  2. The existing government-wide incumbent types are probably going to be holding some meetings to discuss what “this deal” means to existing and new projects involving smart software.
  3. The budget issues about AI investments are significant. Adding more expense for what can be a very demanding client is likely to have a direct impact on advertisers who fund the Google fun bus. How much will that YouTube subscription go up? Would Google raise rates to fund this competitive strike at Microsoft and Palantir? Of course not, you silly goose.

I wish I were at liberty to share some of the Google-related outputs from the Year 2000 procurement. But, alas, I cannot. Let me close by saying, “Google has figured out some basics of dealing with the US government.” Hey, it only took a quarter century, not bad for an ageing Googzilla.

Stephen E Arnold, August 27, 2025

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