Google sparks AI price war by slashing subscription costs

Google has reduced the price of its AI Plus subscription from $7.99 to $4.99 per month. The company has also doubled the storage from 200 to 400 gigabytes. Vikas Kansal, the product lead for Gemini AI subscriptions, announced the updates on X. He said the changes would roll out over the next few days. Google AI Plus first launched in January. It was already the cheapest paid AI plan in the US. The plan offers features like video generation with Omni Flash, the Google Flow creative studio, and NotebookLM. Users who need more can move up to AI Pro or AI Ultra. Investors have taken notice of this move. Chi-Hua Chien from Goodwater Capital called it a warning shot in the AI price wars. He believes AI infrastructure is turning into a commodity. He pointed to history: during the web era, companies like Cisco and Oracle were very valuable. Today, they are not worth as much. Chien argues that the same thing is happening to AI. Companies that build AI models, like OpenAI and Anthropic, have filed to go public. But their high valuations may not last if prices keep falling. Chien thinks Google has an advantage because it can bundle services and reach millions of users. The price competition started in India. OpenAI launched ChatGPT Go for about $4.60 a month in August. Google followed with a sub-$5 plan in December. Now the same strategy has crossed over to the US. Anthropic has not introduced a budget plan yet. It may be forced to respond soon as its rivals continue cutting prices.