Google offering Gemini 2.5 Pro for free, enough to ditch OpenAI, reminds me of an old tactic.
Microsoft gained control in the '90s by bundling Internet Explorer with Windows for free, undercutting Netscape’s browser. This leveraged Windows’ dominance to make Explorer the default choice, sidelining competitors and capturing the browser market. By 1998, Netscape’s share plummeted, and Microsoft controlled access to the web.
Free isn’t generous—it’s strategic. Google’s hooking you into their ecosystem, betting you’ll build on their tools and stay. It feels like a deal, but it’s a moat. They’re not selling the model; they’re buying your loyalty.
The joke's on them, because I don't have any loyalty to an LLM provider.
There's very close to zero switching costs, both on the consumer front and the API front; no real distinguishing features and no network effects; just whoever has the best model at this point in time.
I'm assuming Google's play here is to bleed its competitors of money and raise prices when they're gone. Building top-tier models is extremely expensive and will probably remain so.
Even companies that do it "on the cheap," like DeepSeek, pay tens of millions to train a single model, and total expenditures for infrastructure and salaries are estimated to surpass $1 billion. This market has an extremely high cost of entry.
So, I guess Google is applying the usual strategy here: undercut competition until it implodes and buy up any promising competitors that arise in the future. Given the current lack of market regulation in the US, this might work.
I feel like they’re trying to increase switching costs. eg was huge reluctance to adopt MCP and each had their own tool framework, until it seemed too big to ignore and everyone was just building MCP tools not OpenAI SDK tools.
You don't have loyalty, but one day there will be no one else to switch to. So, if you're a loyal user or not is a moot point.
History shows it's a self-defeating victory. If one provider were to "win" and stop innovating, they'll become ripe for disruption by the likes of Deepseek, and the second someone like that has a better model, I'll switch.
> If one provider were to "win" and stop innovating, they'll become ripe for disruption by the likes of Deepseek
Yes but that can take decades, till that time Google can keep making money with sub standard products and stop innovating.
Nothing lasts forever, not even empires. This doesn't mean that tech monopoly is any better than any other monopoly. They're all detrimental to society.
Eh, and if you're in the US the 'big guys' will have their favorite paid off politician put in a law that use of Chinese models is illegal or whatever.
Rent seeking behavior is always the end game.
The same was true for Web browsers in 2002, yet MS controlled 95% of the access to the web thanks to that bundling and no other "good enough" competitors until Firefox came along a few years later and took 30% from them giving Google an in to take the whole game with Chrome a few years later.
The strategy worked, Netscape is no more. Eventually Google did the same to Microsoft though. I wonder if any lessons can be taken from the browser wars to how things will play out with AI models.
There is a network effect: more user interaction = more training data. I don't know how important it is, though.
Yep, this is why android phones are now pointing out their gemini features every moment they can. They want to turn their spying device into an AI spying device.
> undercutting Netscape’s browser
It almost sounds like you're saying that Netscape wasn't free, and I'm pretty sure it was always free, before and after Microsoft Explorer
> Netscape, in contrast, sells the consumer version of Navigator for a suggested price of $49. Users can download a free evaluation copy from the Internet, but it expires in 90 days and does not include technical support.
https://www.nytimes.com/1996/08/19/business/netscape-moves-t...
90% of Netscape users were free users and by late 1997, less than two years after the IPO and massive user growth, it was free to all because of MS's bundling threat. That didn't help. By 2002, MS owned 95% of access to the web. No one has ever reached even close to first mover Netscape or cheater bundled IE since, with the far superior non-profit Firefox managing almost 30% and Chrome from the biggest web player in history sitting "only" at about 65%.
Bundling a "good enough" products can do a lot, including take you from near zero to overwhelmingly dominant in 5 years, as MS did.
yeah, it was free as the evaluation copy did not really expire. just some features that nobody cared about