Google has a fast-growing new business with ‘Apple-like’ rocketship potential: getting you to pay for subscriptions

It’s a similar tactic Google takes with its storage subscription. Before, it offered generous amounts of free cloud storage to users. Over time, the amount of free allocated storage shrunk as Google nudged users to pay for its Google One subscription, which allows them more storage for photos, emails, and documents.

It seems to be working for Google, too: In February, Pichai announced that the company had crossed 100 million Google One subscribers.

The AI opportunity

Crossing that 100 million threshold coincided with Google bundling its new Gemini Advanced service into Google One—a clever way to get users hooked on a new technology the company is investing heavily in.

Of course, users have been conditioned to expect some level of free service from Google. The company lets anyone use the basic version of its Gemini chatbot and developer tools free of charge, but it keeps more capable models and advanced features, such as image generation, behind a paywall.

Bernstein senior analyst Mark Shmulik compared this tactic to AOL’s CD campaign, in which the company mass-distributed CDs that gave users a free trial of its service. This campaign became a huge success and helped turn the company into an internet juggernaut during the 1990s and early 2000s.

“Offering the new AI features via subscription with 1-year free is certainly interesting,” Shmulik said, referring to a promotional offer Google has run for people who buy its Pixel phones and Chromebooks.

For everyone else, Google has cleverly bundled access to its “Gemini Advanced” tier into Google One, so customers will get it alongside increased storage for Gmail, Drive, and Photos—services that billions of people already use.

None of this includes what Google charges customers for its Workspace products to access more advanced AI features—which appear in Google’s earnings reports under its Cloud segment and are another subscription stream the company is focusing hard on now.

Google still needs to convince users that these extra AI features are worth the additional dollars and will boost user productivity. It may be harder to sell them when they’re not lumped in with must-have features such as additional email storage.

One of Google’s rivals is discovering this. A pharmaceutical company recently canceled its subscription to Microsoft’s Copilot AI, citing a lack of value. The company has also reportedly faced performance issues with some customers.

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