AI campus competition upgraded: OpenAI seizes millions of users at "wholesale price", how will Microsoft Corporation (MSFT.US) and Alphabet Inc. Class C (GOOGL.US) break the game?

Note that, according to purchase orders, OpenAI has sold over 700,000 licenses of ChatGPT to approximately 35 public universities for use by students and faculty. In comparison, Microsoft Corporation (MSFT.US), which typically bundles its Copilot assistant with existing software, has seen slower adoption rates of its AI tools at these schools, with faculty usage often higher than student usage. The popularity of ChatGPT on American campuses has grown rapidly. According to data from 20 schools that have signed contracts with OpenAI, students and faculty used the tool over 14 million times in September. On average, each user called ChatGPT 176 times that month for help with tasks like writing, research, and data analysis. Private schools, not bound by public records laws, have purchasing patterns for AI licenses that are difficult to ascertain, meaning the actual number of university contracts may be much higher. A spokesperson for OpenAI stated that the company has sold "well over a million" licenses to colleges worldwide. A spokesperson for Microsoft Corporation mentioned that many universities are using the company's suite of AI products. The tech industry has long marketed discounted software and hardware to students in hopes of cultivating them as lifelong customers. Apple Inc. (AAPL.US) offers educational discounts annually and launches back-to-school events to attract buyers further. Alphabet Inc. Class C's Chromebook laptops and free apps have also helped garner users on campuses. Now, OpenAI is employing a similar strategy in the field of artificial intelligence. Microsoft Corporation's Copilot and Alphabet Inc. Class C's increasingly popular Gemini may catch up in the future. However, OpenAI has taken the lead with ChatGPT's popularity and substantial discounts, mirroring the appeal it has established among office workers and consumers. According to reviewed contracts, schools willing to purchase bulk access to ChatGPT pay a few dollars per user monthly. This is a significant saving compared to the usual $20 per month fee that OpenAI charges to small educational users. For enterprise users, the cost of ChatGPT can reach up to $60 per month. ChatGPT's use on college campuses is skyrocketing Arizona State University, one of the largest schools in the US, agreed in September to purchase ChatGPT access for all students and faculty. By late November, nearly 10,000 students and 6,400 staff at the university had utilized these new licenses, according to a spokesperson. Several other major universities have taken similar steps. In the fall of 2024, the California State University system decided to provide AI tools to all of its approximately 500,000 students and faculty to ensure even those unable to pay for them individually could use them. Ed Clark, the Chief Information Officer, stated that after evaluating several tools, they found ChatGPT to be the most affordable and familiar to students. The system, including campuses like San Diego State University, agreed to pay OpenAI $15 million annually. Clark revealed that initially, they were interested in Microsoft Corporation's Copilot because of its compatibility with applications like Word that the school was already using. However, Microsoft Corporation's price was significantly higher than what they ended up paying to OpenAI$30 per user per month for Copilot compared to just $2.50 for ChatGPT. According to documents, many universities using Copilot (such as the University of Georgia and the University of Washington) pay around $30 per user per month. Campus Offensive Less than two years ago, many university administrators were skeptical of artificial intelligence. Now, universities have become one of the biggest institutional customers of AI. How did they go from being wary to embracing and loving ChatGPT? Educators were among the first to grapple with the impact of generative AI because it clearly appeared to be a valuable tool for university students. ChatGPT quickly became ubiquitous on campuses, where students used it for basic research, writing, and, of course, even cheating. Concerns over plagiarism led to some schools banning or restricting ChatGPT, which led students to use it discreetly. However, many school administrators have cautiously accepted this technology and are now seeking to establish basic rules for how teachers and students use AI. "We believe there's no 'opting out' in the future," stated Anne Jones, Vice Provost for Undergraduate Education at Arizona State University. "Employers expect and require a workforce that knows how to operate these tools." At the same time, the tech industry is working together to convince schools of the benefits of AI. OpenAI has hired salespeople focused on education and poached a senior executive from Coursera, an online learning platform frequently used by universities. Leah Belski, a former Coursera employee and current Vice President of Education at OpenAI, stated, "University students are among our heaviest users." Before the end-of-term exams in spring 2025, OpenAI made ChatGPT available to students for free and rolled out a massive advertising campaign. They also hired "student ambassadors" to promote the tool within the California State University system. Belski said, "More and more education ecosystems are realizing that AI will be around for the long term." Her argument to universities is that adopting AI formally can be used to enhance learning, job readiness, and teaching methods as opposed to hindering learning if AI is seen as merely an "answer machine." Meanwhile, Microsoft Corporation funded research on the application of AI in education. Schools using their software can now access the basic version of their AI chat assistant for free, and the company recently announced a price reduction for academic institutionsreducing the price of the premium version from around $30 per month to $18. A Microsoft Corporation spokesperson said, "For decades, Microsoft Corporation has been partnering with universities to support their evolving teaching, research, and operational needs through trusted technology and innovation." Federal and state policymakers are also offering incentives to schools that formally adopt AI initiatives. Earlier this month, the Trump administration announced new federal higher education funding priorities, including a $50 million fund to support expanding AI access and leveraging the technology to "enhance teaching, learning, and student success." While embracing AI, some schools remain cautious and are intensifying research into its potential impact on education. In March of this year, Netflix Chairman Reed Hastings donated $50 million to Bowdoin College for in-depth research into the impact of these tools on teaching and learning. Eric Jone, a professor of digital and computational studies at Bowdoin College, is leading this effort and states that the technology's ability to help students learn has not yet been proven. He says that AI may reduce administrative tasks like managing schedules and designing course plans but may not be as effective in actual teaching. Jone is concerned that universities are rushing into contracts with OpenAI without fully understanding how AI can improve education, instead fearing being left behind. Many schools are slowly rolling out these tools while testing their effectiveness. The University of Nebraska at Omaha began purchasing ChatGPT licenses in spring 2025 and surveyed hundreds of staff. The results showed that 92% of teachers, librarians, and students surveyed would recommend the tool to others, with most saying it saved them between 1 to 5 hours per week. Writing and brainstorming are the most common uses, but around a quarter of respondents use it for lesson planning and student guidance. As of September, the school had around 800 active users. The adoption rates vary significantly. At the University of Illinois at Urbana-Champaign, around 200 faculty and staff are active on the school's ChatGPT license accounts. A few "power users" account for most of the usage. In September, a policy researcher called upon the tool 742 timesaround 34 times a day assuming a standard working week. Meanwhile, most users used the tool less than 10 times a month. (The school also paid for around 600 licenses of Microsoft Corporation Copilot.) Meredith Martin, the Chief Information Officer of the school, stated that the emergence of "early power users" is not uncommon. However, she also pointed out that concerns among faculty and staff about legacy technology, including plagiarism and data security, are reasons the school is proceeding cautiously. The school has foregone the significant discounts that come with large-scale license agreements to demonstrate to staff that these concerns are being taken seriously. OpenAI Signs Partnership Agreements with Several Prestigious Universities for ChatGPT How long OpenAI will maintain its lead in the campus domain partly depends on the responses of Alphabet Inc. Class C and Microsoft Corporation. To retain its share in the education market, Alphabet Inc. Class C offers a one-year free trial of the Gemini AI assistant professional version to all students. They also provide a completely free basic version of the AI assistant, which has been promoted to 100,000 students in the Miami-Dade County Public Schools district (one of the largest districts in the US). (According to documents, the district also spent $150,000 on 400 Alphabet Inc. Class C professional version AI licenses, mainly for educators. Alphabet Inc. Class C is also promoting its AI technology's usage in colleges like Boise State University. Microsoft Corporation's software is prevalent in enterprises, and the company has convinced many businesses to adopt Copilot and other AI tools embedded in office applications like Word, Excel, and Teams. However, in the education sector, Microsoft Corporation's advantage is weaker due to competition from Alphabet Inc. Class C and other factors. Many surveyed schools have only purchased a limited number of Copilot licenses (mainly for faculty use), and widespread adoption among students has not been seen yet. The Texas State University System is a major customer of Microsoft Corporation, paying around $1 million annually. All faculty and students at the university can access the basic version of Microsoft Corporation Copilot through bundled services. The adoption rates are decentdocuments show that around 69,000 independent devices connected to Copilot on campus Wi-Fi in November and December. However, even without formal contracts, the usage rate of ChatGPT is twice that of Copilot. The usage rate of Alphabet Inc. Class C's Gemini is also slightly higher than Copilot. Matt Hall, the Chief Information Officer of the university, stated in an interview that the school is currently negotiating with Alphabet Inc. Class C to purchase more of their advanced AI tools. OpenAI is confident in winning over university students. Leah Belski of OpenAI said, "Many universities, even if they already have Gemini, Microsoft Corporation, and other AI tools, will still bring us in. Because at the end of the day, students' favorite technology is ChatGPT."