Tech Giants Offer Free AI Subscriptions: The Strategic Play for Platform Dominance

Google and Airtel have recently made headlines by offering premium AI subscriptions for free to large segments of their user bases. Airtel is providing Perplexity Pro, typically valued at ₹17,000 per year, to all its 360 million customers, while Google is offering Gemini AI Pro, usually priced at ₹19,500, to Indian students. These gestures may seem magnanimous, but they are deeply strategic moves aimed at securing a dominant position in the emerging AI landscape. The primary goal of these companies is not to sell AI models directly but to establish themselves as the foundational platforms that other businesses and developers will rely on. This approach mirrors the early days of the mobile computing revolution, where companies like Apple and Google gained unprecedented value by controlling the operating systems—iOS and Android—that became the standard for mobile applications. In the AI domain, the battle is similar: instead of competing on the quality of individual models, the focus is on becoming the platform that every other company integrates into their products. AI models, once considered proprietary assets, are becoming commoditized. Sam Altman, CEO of OpenAI, highlighted this trend, suggesting that the future value lies not in the AI models themselves but in the user base and the data they generate. In five years, there will likely be multiple sophisticated AI models available, but the platform with the largest user base will hold significant leverage. By offering free services, companies aim to cultivate user habits and lock in loyalty, much like how Google search became the default choice for internet searches due to habitual use. Every interaction with these AI services generates valuable data. For example, when millions of users engage with a chatbot like ChatGPT, the data from these interactions helps refine and improve the AI model. Since this data is exclusive to the company that collects it, it creates a "snowball effect"—the more users, the better the AI, and the greater the difficulty for competitors to catch up. Google's free Gemini Pro for Indian students is a prime example of this strategy, allowing the company to gather data on how the next generation of professionals and consumers will use AI. Cost efficiency is another key factor. Companies have significantly reduced the operational costs of running AI services through technical optimizations, often by 75%. This reduction means that offering free services is more feasible and sustainable than it might initially appear. Additionally, while the consumer services are free, the companies are banking on the resulting brand trust and familiarity to drive lucrative enterprise sales. Businesses are more likely to choose AI providers that their employees are already comfortable with, and enterprise contracts can be worth hundreds of thousands to millions of dollars annually. Defensively, these free offerings help protect existing business models. Google, which dominates search and relies heavily on search-based advertising, cannot afford to lose this market to AI-powered alternatives. Similarly, Microsoft needs to defend its productivity software suite against AI-based competitors. Free AI services ensure that users remain within their ecosystems, reducing the risk of defection to rival platforms. The psychological impact of free services is substantial. When a service is free, users are more willing to try it out and integrate it into their routines. This habit formation is crucial for long-term engagement and loyalty. For instance, Indian students who use Google’s free AI during their academic years are likely to favor Google’s AI when they enter the workforce. Ultimately, these tech giants are making calculated moves to position themselves as the indispensable infrastructure for the AI-integrated future. AI will likely become embedded in everyday applications and devices, and the company that manages to cement itself as the default AI platform will wield considerable power. By offering free AI now, these companies are fostering user dependency and setting the stage for platform dominance in the years to come. Industry insiders note that these strategies reflect a broad understanding of the transformative potential of AI and the fierce competition in the sector. Companies like Google and Microsoft recognize that controlling the underlying AI platform will be crucial for maintaining their market positions and driving future growth. Google's deep expertise in data management and user engagement, along with Microsoft's stronghold in enterprise software, position both companies well to navigate this new technological landscape.