'They dropped the price by 90%': Sridhar Vembu claims Microsoft Office customer secured huge licence discount after weighing Zoho

Zoho co-founder Sridhar Vembu has claimed that an Indian customer managed to secure a 90% reduction in the price of a Microsoft Office licence renewal after telling the software giant it was considering switching to Zoho's office suite. Vembu shared the anecdote on X, arguing that competition gives customers greater bargaining power.

Referring to the customer, Vembu wrote, "A big Microsoft Office license renewal came up and they hiked the price drastically. We told them we are looking at the Zoho office suite and they dropped the price by 90%." He added that the customer later thanked him for "saving them big money, even without buying our office suite."

Vembu did not identify the customer, disclose the size of the Microsoft contract, specify which Microsoft products were involved, or reveal the commercial terms behind the reported discount.

He also suggested that organisations negotiating Microsoft Office licence renewals should use Zoho as leverage during price discussions. "If you are facing renewal of Microsoft Office license, I suggest you mention Zoho," he wrote.

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AI competition sparked the discussion

The Microsoft anecdote came as part of a broader post on competition in the artificial intelligence industry.

Vembu said the global rollout of Anthropic's latest AI models suggested that Chinese open-source AI models had become a serious enough competitive threat to established players. "Anthropic's latest models available worldwide. In other words, Chinese open source models posed a serious enough threat to market share," he wrote.

Drawing a parallel with enterprise software, he argued that competition limits the pricing power of dominant companies and ultimately benefits customers.

Refers to Microsoft's antitrust history

In the same post, Vembu referred to Microsoft's antitrust case in the United States, writing, "Microsoft is a convicted monoplist by a US Federal Court (April 2000) and the monopoly finding but not the suggested remedy was upheld by the U.S Court of Appeals (DC circuit) in 2001."

He further claimed that "Microsoft has a long illustrious history of milking the customer dry," arguing that stronger competition is important across AI, enterprise software and cloud services.

Optimistic about India's AI progress

Vembu also expressed confidence in India's AI ecosystem, saying the country would eventually catch up in developing frontier AI models.

"Finally, I am now confident that India will catch up in AI models. There is no reason to be despondent. There are multiple efforts going on in academia and industry and the cost to train AI models is starting to fall," he wrote.

He added that he had recently met members of the BharatGen team at IIT Bombay, saying they were making "great progress" and that he would write more about the initiative soon.

Microsoft has not publicly commented on Vembu's claims.