In the past week, OpenAI and Anthropic have rolled out exclusive pricing for government editions of their AI chatbots, ChatGPT and Claude, respectively, while xAI introduced Grok for Government in mid-July. Both OpenAI and Anthropic are offering their chatbots to federal agencies for just $1 for one year. Anthropic went a step further than OpenAI by opening this special $1 rate to all three government branches, whereas ChatGPT’s $1 offer is targeted at the executive branch.

Attracting government clients can be highly beneficial for technology firms to build large user bases and secure lucrative contracts. The US government annually allocates over $100 billion to “IT and cyber-related investments, including software licenses.” This $1 strategy mirrors a successful enterprise model used by companies like Slack: onboard as many users as possible in the hope that the service becomes indispensable, leading to continued subscriptions at higher prices. Anthropic, OpenAI, Google, and xAI have all landed contracts potentially worth up to $200 million to aid the modernization of the US Defense Department. By initially offering their products at a minimal cost, OpenAI or Anthropic could gain a competitive advantage as they compete for influence across other government areas.

As debates continue on how to regulate AI, there might also be an advantage in embedding these services into government operation — familiarizing and making them essential could create reluctance to introduce strict regulations. OpenAI noted in their announcement that their initiative aligns with a core aspect of the Trump Administration’s AI Action Plan, aiming to make powerful AI tools accessible throughout the federal government. This approach is intended to reduce time on bureaucratic tasks, allowing public servants to focus more on directly serving the American public.