All of us are inundated with offers of a free trial period for some goods or services. The sellers of those products, from drugs to magazine subscriptions, know that it helps to get people hooked on their product and that there is no better way to get people addicted than to offer it free for a short period.

This also happens at the governmental level and Renee Dudley of ProPublica reports that major companies like Microsoft and Elon Musk’s Starlink are using this tactic in order to get the US government dependent on them so that they cannot escape giving them long-term contracts.

A few weeks ago, my colleague Doris Burke sent me a story from The New York Times that gave us both deja vu.

The piece reported that Starlink, the satellite internet provider operated by Elon Musk’s SpaceX, had, in the words of Trump administration officials, “donated” internet service to improve wireless connectivity and cell reception at the White House.

The donation puzzled some former officials quoted in the story. But it immediately struck us as the potential Trump-era iteration of a tried-and-true business maneuver we’d spent months reporting on last year. In that investigation, we focused on deals between Microsoft and the Biden administration. At the heart of the arrangements was something that most consumers intuitively understand: “Free” offers usually have a catch.

Microsoft began offering the federal government “free” cybersecurity upgrades and consulting services in 2021, after President Joe Biden pressed tech companies to help bolster the nation’s cyber defenses. Our investigation revealed that the ostensibly altruistic White House Offer, as it was known inside Microsoft, belied a more complex, profit-driven agenda. The company knew the proverbial catch was that, once the free trial period ended, federal customers who had accepted the offer and installed the upgrades would effectively be locked into keeping them because switching to a competitor at that point would be costly and cumbersome.

Former Microsoft employees told me the company’s offer was akin to a drug dealer hooking users with free samples. “If we give you the crack, and you take the crack, you’ll enjoy the crack,” one said. “And then when it comes time for us to take the crack away, your end users will say, ‘Don’t take it away from me.’ And you’ll be forced to pay me.”

What Microsoft predicted internally did indeed come to pass. When the free trials ended, vast swaths of the federal government kept the upgrades and began paying the higher subscription fees, unlocking billions in future sales for the company.
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During our Microsoft investigation, salespeople told me that within the company the explicit “end game” was converting government users to paid upgraded subscriptions after the free trial and ultimately gaining market share for Azure, its cloud platform.

The reason for this strategy is that it enables these companies to evade the competitive bidding process that the government usually requires before it issues any contracts.

Typically, in a competitive bidding process, the government solicits proposals from vendors for the goods and services it wants to buy. Those vendors then submit their proposals to the government, which theoretically chooses the best option in terms of quality and cost. Giveaways circumvent that entire process.

Yet, to hear Commerce Secretary Howard Lutnick tell it, the Trump administration wants to not only normalize such donations but encourage them across Washington.

Last month, during an appearance on the Silicon Valley podcast “All-In,” he floated his concept of a “gratis” vendor who “gives product to the government.” In the episode, released just a few days after The New York Times published its Starlink story, Lutnick said such a donor would not “have to go through the whole process of becoming a proper vendor because you’re giving it to us.” Later, he added: “You don’t have to sign the conflict form and all this stuff because you’re not working for the government. You’re just giving stuff to the government. You are literally giving of yourself. You’re not looking for anything. You’re not taking any money.”

But Lutnick is being disingenuous in saying that these big corporations are doing this out of the goodness of their hearts.

Federal law has long attempted to restrict donations to the government, in large part to maintain oversight on spending.
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But in 1947, the General Accounting Office (now called the Government Accountability Office), which offers opinions on fiscal laws, made an exemption: Providing what became known as “gratuitous services” would be allowed as long as the parties agree “in writing and in advance” that the donor waives payment.
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A source from last year’s Microsoft investigation recently called to catch up. He told me that, with the government locked into Microsoft, rivals continue to be shut out of federal contracting opportunities. When I asked for an example, he shared a 2024 document from the Defense Information Systems Agency, or DISA, which handles IT for the Department of Defense. The document described an “exception to fair opportunity” in the procurement of a variety of new IT services, saying the $5.2 million order “will be issued directly to Microsoft Corporation.”

The justification? Switching from Microsoft to another provider “would result in additional time, effort, costs, and performance impacts.” DISA did not respond to emailed questions.

You can see why Musk is so willing to ‘donate’ his time to the federal government. Apart from satisfying his pathological desire to destroy agencies and inflict pain on tens of thousands of government employees, it also enables him to get his foot in the door for contracts. With so many of his own people now in positions of authority, can there be any doubt that his companies are going to get contracts, especially with the ‘free’ offers he is giving?