2026 is shaping up to be a crucial year for Microsoft, a company that has dominated workplace productivity for decades with its Office suite. Google, meanwhile, has built a strong challenger over the years by mirroring many of Microsoft’s products. Google Workspace offers Docs to compete with Microsoft Word, Sheets to rival Excel, and Slides as an alternative to PowerPoint. For countless startups and small businesses, Google provided a viable, cost-effective alternative to Microsoft Office.
When budgets are tight, getting a similar productivity platform for a lower cost (or even free) made Google’s suite especially attractive compared to Microsoft’s paid licenses. This dynamic defined the productivity software landscape in recent years, with Microsoft holding the legacy crown and Google chipping away at it as the affordable alternative.
However, this is changing rapidly with the evolution of artificial intelligence (AI). Over the last year, Google has developed its own AI solution, Gemini, into a powerhouse that rivals the likes of OpenAI’s ChatGPT and Anthropic’s Claude platforms. The evolution of Gemini has been dramatic, from a limited LLM late into 2024, Gemini has evolved into a fully realised multimodal platform offering natural language processing, image generation, voice understanding, and even video creation. This capability promises to deliver strong performance for Google in 2026. This is especially aided by the fact that Google owns the whole ecosystem, making integration more seamless between Google’s Gemini and Workspace.
In practical terms, this means Google’s apps are becoming a lot smarter, with users able to interact with Docs, Sheets, and Gmail using natural language and get intelligent assistance and automation. Routine tasks and more intensive, “heavy lifting” work can be offloaded to Google’s AI to support, allowing users to get better results with less effort. Google is positioning itself to offer a fully integrated suite of business tools seamlessly backed by one of the strongest AI platforms around.
Google started rolling out Gemini into Workspace in January 2025, for companies on Business or Enterprise tiers. This came at no extra cost to organisations, making the entry point for use cheap and easy, while also allowing Google to adjust and improve over time at scale. Meanwhile, cost-conscious organisations did not need to invest anything further to unlock early potential efficiencies.
On the other side of this battle, Microsoft’s big AI initiative is Microsoft 365 Copilot, their attempt at an AI assistant for Office apps powered by OpenAI’s GPT models. Microsoft has not been shy about its AI ambitions, famously investing over $10 billion in OpenAI to ensure it had access to cutting-edge AI technology.
In theory, this should have given Microsoft a major advantage: Copilot could leverage GPT models directly within Word, Excel, PowerPoint, Outlook, and more. Microsoft’s demos of Copilot in early 2023 were extremely impressive, showcasing AI creating slideshows from mere outlines, analysing Excel data to provide insights, drafting emails and meeting agendas, and even generating images for Word documents.
Reality, however, has not yet lived up to the hype. Despite the massive investment and the powerful AI under the hood, Microsoft has struggled to turn Copilot into a consistently viable, value-adding extension of its Office suite. Currently, Microsoft 365 Copilot can handle basic tasks; for example, it can summarise emails or Teams chats, suggest replies in Outlook, and rephrase text in Word. It also offers basic help in Excel (finding trends or creating simple formulas) and can draft simple slides in PowerPoint from a prompt. But outside of email and simple writing assistance, Copilot’s intelligence often falls short.
Copilot has been able to highlight the largest values or sort data when prompted in Excel, but it is seemingly incapable of handling unstructured data or performing any complex modelling and scenario variations, resulting in the AI within Excel struggling to provide viable support. Within PowerPoint, Copilot can create simple deck drafts, but is still unable to follow company brand guidelines or produce anything client to ‘client-ready’ decks.
All of this would be acceptable as part of the development process for Microsoft if Copilot were a free extension that people accepted would improve over time. However, Microsoft has positioned Copilot as a premium add-on for Office 365, with the pricing sitting at roughly $30 per user per month, on top of the existing Office 365 subscription cost. For large organisations, this could mean millions of dollars of additional cost for a platform that is still very basic in its offering.
Naturally, such a high cost sets sky-high expectations; with companies paying that much, they will expect Copilot to dramatically boost employee productivity or provide capabilities far beyond what they can already do. So far, those expectations are not being met. Early reviews and pilots by businesses have described Copilot as interesting but not game-changing. Copilot is good at polishing the edges (summaries, email drafts, quick edits), but it’s not yet performing the kind of heavy-duty analysis or content generation that would justify the cost.
Microsoft is in a challenging position with its AI solutions, because it is powered by a completely separate company in OpenAI. Meanwhile, Google has all of their solutions within one ecosystem, allowing for easier integrations and development without fear of shared technology secrets and IP. This is why Google is poised to take the driver’s seat in the productivity software arena, thanks to its head start in AI integration. By embedding a powerful AI (Gemini) across its suite without a steep additional cost, Google is lowering the barrier for organisations to have AI-assisted work. Employees using Google Workspace will simply find more and more “smart” features at their fingertips, delegating tasks to AI and gaining insights or drafts instantly, potentially boosting productivity and creativity. Microsoft, on the other hand, risks pricing itself out of the race if Copilot doesn’t dramatically improve. Right now, asking enterprises to pay $30/user for an AI assistant that only partially delivers might slow adoption of Microsoft’s solution, or even drive curious customers to sample Google’s offering, where the AI is included by default.
It is possible that by late 2026, Copilot will catch up to or even surpass Google. Microsoft still maintains a strong ace up its sleeve with its deep entrenchment of Office in large enterprises. Big companies may be slower to change platforms, and many will give Microsoft the benefit of the doubt and more time to refine Copilot. It is also important not to ignore the privacy concerns that linger around Google, while Microsoft touts Copilot’s ability to respect enterprise data boundaries and has enterprise-grade security and compliance, which some regulated industries might trust more than Google.
Despite all this, Google is positioned to take a huge step forward in the productivity space in 2026. The biggest question will be whether organisations will shift to Google’s advanced offering for a reduced price and improved productivity before Microsoft can develop Copilot into a viable competitor to Google.