Well, That Was Quite the Week

Well, it’s been an interesting week. It was just days ago, but I’m already having trouble remembering the history here. But when I started writing 2025 is the Year of Competing AI Business Models (Premium), I intended to compare the following:

• Microsoft, which was switching from a pay/pay extra divide with Copilot AI via Microsoft 365 and Microsoft 365 Copilot/Copilot Pro, respectively, and
• Google, which had a pay/pay extra model identical to Microsoft’s previous model with Workspace/Google One and Gemini Advanced.

My original point was that what Microsoft was doing was smart: By giving those who pay for Microsoft 365 monthly “AI credits,” it could expose customers who don’t want to pay $30/$20 extra per month for whatever Copilot offering some exposure to that functionality. For many, those credits will be enough. But for others, and for more should the offering gets bigger/better, they might use Copilot enough that paying extra for more access makes sense. This, to me, is just good business.

But as I was writing that, Google announced a major change to how it delivers (Gemini) AI to users of its productivity services (Workspace). And it diverged from the Microsoft model:

• Now, Google has a single set of paid options. All Workspace tiers get some access to what used to be Gemini Advanced features (Starter doesn’t get much). And the paid Gemini Advanced add-on (and others) is gone. AI is just part of Workspace now.

This, to me, makes even more sense. The asterisk on that statement is that it makes sense if the value is there. That is, if Google’s price hikes on each Workspace tier are reasonable, then it’s fine. $20 or $30 per month per user is too much. And, Google’s price hikes are reasonable. So we’re good on that one.

Of course, we knew that Microsoft 365 price hikes were coming too. It had started experimenting with these price hikes in some markets, so it was only a matter of time.

That matter of time, as it turns out, was one day. Hilarious. On Thursday, Microsoft announced that its price hikes on Microsoft 365 Family and Personal, revealing that it is doing with consumers what it is doing with businesses:

• There are paid Microsoft 365 subscriptions that come with monthly “AI credits” that subscribers can use towards Copilot features. Microsoft says this will be enough Copilot usage for most subscribers. But …
• There is still a paid Copilot Pro subscription at $20 per user per month. This is, as before, analogous to the Microsoft 365 Copilot subscription (at $30 per user per month), in that it opens the floodgates on Copilot feature usage.

And this, to me, also makes sense. It’s different from what Google is doing. But it feels like a reasonable set of choices.

That said, the same caveat applies. It makes sense if the value is there.

It is. The value is there.

Yes, on the one hand, Microsoft is raising prices on one tier more than Google is (though Google’s comparable offerings are for businesses and we’re talking about consumer subscriptions here). Here’s a breakdown.

• Google Workspace Standard now costs $14 per user per month (if paid annually). This is 17 percent pricier than before, but it provides unlimited access to Gemini AI features.
• Microsoft 365 Personal is now $8.33 per month (if paid annually). This is 10 percent price increase, and it comes with limited access (via AI credits) to Copilot AI features.
• Microsoft 365 Family is now $10.82 per month (if paid annually). This is a 30 percent price increase, and it comes with limited access (via AI credits) to Copilot AI features.

30 percent seems like a lot. But we’re talking about $130 vs. $100 once per year. And Microsoft 365 Family remains an epic no-brainer, since it provides six users with full access to Office capabilities on desktop and mobile, 1 TB of OneDrive storage, and whatever else.

Put simply, what Microsoft is doing is reasonable. In the sense that we have a relationship with the company that makes software we use, this is not toxic. It’s a win-win, and that’s what we’re looking for in this kind of relationship. The value is there. Those that don’t want Copilot for whatever misguided reasons–seriously, this is like spelling and grammar checking stuff, but better–don’t have to use it. They can pay the old prices, for now, on “classic” subscriptions without the AI credits. But the value is still there either way. Overreacting about AI generally or Copilot specifically doesn’t change that.

Wrapping up, I’ll just point once more at I Will Not Pay for AI (Premium). What’s changed since then is that both Google and Microsoft are now letting me use AI with the thing I am paying for, which is their respective productivity subscriptions. That, I will pay for. Have paid for. And will continue paying for. Because the value is there in both cases. Even though each is a bit different from the other.