Subscription Models

The AI arms race is evolving into a billing battle, with tech giants bundling AI tools into subscription tiers, potentially forcing users to pay for unwanted or underutilized features. Companies like Microsoft, Meta, Google, and Adobe are integrating AI across their suites, often increasing prices without clear justification. Experts highlight concerns about “perceived value bias” and the lack of consumer control, suggesting usage-based pricing as a potential solution amid growing consumer awareness of accumulating costs. The shift to subscription models and the underlying infrastructure costs of AI are also key factors.

Google Cloud’s CEO Thomas Kurian says the division is already profiting significantly from AI investments. At a recent conference, Kurian outlined monetization strategies including consumption-based pricing for AI infrastructure (GPUs, TPUs, models via “tokens”) and subscription models for services like cybersecurity and Google Workspace. Upselling to higher-priced AI tiers also contributes to revenue growth. Google Cloud’s customer commitment backlog is at $106 billion, and it secured a $10 billion cloud contract with Meta. Cloud revenue grew 32% year-over-year in the latest quarter.