Microsoft and Google pursue differing AI agent approaches in M365 and Workspace

Microsoft and Google are taking distinctive approaches with AI agents in their productivity suites, and enterprises need to account for the differences when formulating digital labor strategies, analysts said.

In recent months, both companies have announced a dizzying array of new agents aimed at extracting value from corporate documents and maximizing efficiency. The tech giants have dropped numerous hints about where they’re headed with AI agents in their respective office suites, Microsoft 365 and Google Workspace.

Microsoft is reshaping its Copilot assistant as a series of tools to create, tap into, and act on insights at individual and organizational levels. The Microsoft 365 roadmap lists hundreds of specialized AI tools under development to automate work for functions such as HR and accounting. The company is also developing smaller AI models to carry out specific functions.

Google is going the opposite way, with its large-language model Gemini at the heart of Workspace. Google offers tools that include Gems for workers to create simple custom agents that automate tasks such as customer service, and Agentspace in Google Cloud to build more complex custom agents for collaboration and workflow management. At the recent Google I/O developer conference, the company added real-time speech translation to Google Meet.

“For both, the goal is to bring usable and practical productivity and efficiency capabilities to work tools,” said Liz Miller, vice president and principal analyst at Constellation Research.

But the differing AI agent strategies are heavily rooted in each company’s philosophical approaches to productivity. Although Microsoft has long encouraged customers to move from its traditional “perpetual-license” Office suite to the Microsoft 365 subscription-based model, M365 notably retains the familiar desktop apps. Google Workspace, on the other hand, has always been cloud-based.

Microsoft users are typically a bit more tethered to traditional enterprise work styles, while Google has always been the “cloud-first darling for smaller organizations that still crave real-time collaboration,” Miller said.

When it comes to the generative AI models being integrated into the two office suites, “Google’s Gemini models are beating out the models being deployed by Microsoft,” Miller said. “But as Microsoft expands its model ‘inventory’ in use across M365, this could change.”

Microsoft has an advantage, as many desktop users live in Outlook or Word. The intelligence Copilot can bring from CRM software is readily available, while that integration is more complex in the cloud-native Google Workspace.

“Microsoft still has an edge in a foundational understanding of work and the capacity to extend Copilot connections across applications as expansive as the Office suite through to Dynamics, giving AI a greater opportunity to be present in the spaces and presentation layers where workers enjoy working,” Miller said.

Microsoft’s Copilot Agents and Google’s Gems and Agentspace are in their early stages, but there have been positive developments, said J.P. Gownder, a vice president and principal analyst on Forrester’s Future of Work team.

Microsoft recently adopted Google’s A2A protocol, which makes it easier for users of both productivity suites to collaborate and unlock value from stagnant data sitting on other platforms. “That should be a win for interoperability,” Gownder said.

But most companies that are Microsoft shops have years or decades of digital assets that hold them back from considering Google, he said. For example, Excel macros, pivot tables, and customizations cannot be easily or automatically migrated to Google Sheets, he said.

“As early as this market is, I don’t think it’s fair to rank either player — Microsoft or Google — as being the leader; both of them are constructing new ecosystems to support the growth of agentic AI,” Gownder said.

Most Microsoft Office users have moved to M365, but AI is helping Google is making inroads into larger organizations, especially among enterprises that are newer and less oriented toward legacy Microsoft products, said Jack Gold, principal analyst at J. Gold Associates.

Technologies like A2A blur the line between on-premises and cloud productivity. As a result, “Google Workspace is no longer perceived as inferior, as it had been in the past,” Gold said.

And for budget-constrained enterprises, the value of AI agent features is not the only consideration. “There is also the cost equation at work here, as Google seems to have a much more transparent cost structure than Microsoft with all of its user classes and discounts,” Gold said.

Microsoft does not include Copilot in its M365 subscriptions, which vary in price depending on the type of customer. The Copilot business subscriptions range from $30 per user per month for M365 Copilot to $200 per month for 25,000 messages for Copilot Studio, which is also available under a pay-as-you-go model. Google has flat subscription pricing for Workspace, starting at $14 per user per month for business plans with Gemini included.