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Microsoft shadows Google: 365 now includes AI as standard

Microsoft shadows Google: 365 now includes AI as standard

In the wake of Google Workspace adding AI everywhere, all versions of Microsoft 365 will now feature the same setup.

Microsoft 365 Personal and Family are now equipped with Copilot functionality. Previously, this cost $20 per month per user as a Copilot Pro add-on. However, the move does come with an increase to the standard price for a 365 subscription by $3 p/m/u. The difference with Google Workspace here is that users have an opt-out. Choosing to do so means you keep the old price, at least for now.

The price change is therefore optional, but still unprecedented. Those not opting out of the Personal and Family plans face a price hike for the first time in 12 years. Incidentally, there are monthly credits for Copilot use in Word, PowerPoint, Excel and other apps. Those who want unrestricted AI use still have to pay $20 a month.

Inevitable

Microsoft was already experimenting with higher rates for a bundled AI package in select regions in Asia and Oceania. Now, it’s rolling out to other countries. It’s a quick, prepared response to Google’s Workspace change earlier in the week.

The logical question is whether the previous Copilot Pro setup at $20 monthly was too pricey for organizations. Microsoft and Google now seem to have realized that they prefer to offer their AI features by default, even though it may be many times more expensive to do more AI calculations in cloud servers, should most users opt to make use of the feature.

Despite the fact that AI companies are losing money with their current services, several explanations exist for making the new setup more advantageous for them. First, many 365 and Workspace users simply won’t use AI much, which drives down the theoretical cost. Also, data from some users is being probed to refine features to allow for more innovation. This makes the end product more competitive and may lead to higher margins further down the line.

The early adopter phase is over

According to a Microsoft representative in conversation with The Verge, it was important for Copilot Pro to learn from power users and early adopters. That initial phase now seems to be over. It will be a long time before professional users have GenAI tools integrated into their workflows. Still, 365 and Workspace’s new pricing model may accelerate that process.

Also read: Google is adding AI to every Workspace subscription