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Microsoft Speaks on the “Google Tax”

One of the obvious questions one asks when confronted with the superior but (comparatively) expensive Office 365 ($6 per user per month) and the free but less capable Google Apps is … why not just make a free version of Office 365? I’ve ask this question. And others have as well. But in Microsoft’s view, even the free version of Google Apps isn’t really free. And Mike Rizzo has posted an interesting post today explaining why this is so. Microsoft calls it the “Google Tax.”


There are hidden costs when using Google Apps that are tantamount to paying a “tax”.

The “Google Tax” is unnecessary and can add up quite quickly. This is especially true when running Google Apps alongside Microsoft Office. We have our own opinions, but we also wanted to hear directly from customers who have tried Google Apps. We recently interviewed more than 90 small and medium-sized organizations using Google Apps across 5 countries, including in the US, France and Japan. Our survey uncovered some very interesting findings, including:

- For 9 out of 10 companies surveyed, Google Apps are used in parallel to Office. These companies have not replaced Office due to user readiness, productivity requirements, security concerns and the inability to work offline. Interestingly, Gartner confirms that the vast majority of enterprises will continue to standardize on Microsoft Office, while they only evaluate free trials of Google Apps, and do not intend to spend money on deployments.

- Of the small and medium sized businesses that participated in our survey, most were limited to using Gmail and calendar. Only two in five adopted Google Docs and two out of three companies still use Office as their primary productivity solution.

Taxing the Business
On the surface, Google Apps may seem like acceptable replacements for enterprise-grade products such as Microsoft Exchange Server or Microsoft Office. But many IT organizations have found that Google Apps bring extra, hidden costs. Organizations that have evaluated Google Apps have found that the projected versus actual costs of switching to Google Apps greatly increase theirtotal cost of ownership (TCO). In particular, these IT organizations have found that Google Apps are not enterprise-ready and are inadequate without costly add-on applications, even for most small- and medium-sized organizations. The three general areas where organizations feel the Google Tax most strongly are deployment, IT support costs and user training.

There’s more in the post around deployment, IT support, and user training costs, so be sure to read the full post. But I agree with all of this: As Mr. Rizzo notes, “Google Apps offer very basic functionality.” Yep. That, to me, is the biggest issue, and the key reason why Office 365 is simply superior.
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