Since the introduction of ChatGPT, companies specializing in artificial intelligence have been actively pursuing opportunities to engage with government agencies. A key strategy has been to attract these users by offering their products at significantly reduced prices.
In the past week, OpenAI and Anthropic launched promotional pricing for government editions of their generative AI chatbots—ChatGPT and Claude, respectively. Meanwhile, xAI unveiled its Grok for Government initiative in mid-July. OpenAI and Anthropic are offering federal agencies access to their chatbots for an introductory price of just $1 for a year. Anthropic’s recent announcement emphasized access for all three branches of government under a similar offer for Claude, while OpenAI’s ChatGPT will focus on the executive branch at this low cost.
Attracting government clients presents a lucrative opportunity for technology firms to build extensive user bases and generate revenue. According to the US government, more than $100 billion is spent annually on IT and cybersecurity investments, which includes software licenses. The $1 offer aligns with a strategic approach commonly seen in enterprise software markets, as demonstrated by successful companies like Slack, which aim to onboard numerous users initially, anticipating that their platforms will become so integral that organizations will continue paying for them at higher rates. To date, Anthropic, OpenAI, Google, and xAI have secured contracts potentially valued up to $200 million aimed at modernizing the US Defense Department. By offering their products at minimal costs—at least for the moment—OpenAI and Anthropic could gain a competitive advantage in the public sector.
Amid ongoing discussions regarding the regulation of AI, there could be advantages in familiarizing government employees with these advanced tools, creating a sense of dependency and possibly making those employees less inclined to curtail their usage. OpenAI noted in its announcement that its program is designed to fulfill a fundamental aspect of the AI Action Plan established during the Trump Administration. This plan seeks to provide powerful AI resources to federal workers, enabling them to reduce time spent on bureaucratic tasks and redirect their focus towards serving the public effectively.
