Google Debuts Gemini 3.5 at I/O — Agentic AI Push, Ultra Plan Cut to $200

Google unveiled the Gemini 3.5 model family at its annual I/O conference. The launch combines frontier AI reasoning with agentic capabilities — and comes with a price cut that signals escalating competitive pressure.

Google announced its next-generation AI model family, Gemini 3.5, at its annual I/O developer conference on May 19. The launch targets both OpenAI and Anthropic, simultaneously boosting reasoning performance and agentic functionality. Google shares (GOOGL) fell 1.31% on the day of the announcement.

Gemini 3.5 Flash: Faster and More Capable

The first model to launch, Gemini 3.5 Flash, is now Google's most powerful coding and agentic model, surpassing its own Gemini 3.1 Pro on performance benchmarks. It delivers reasoning capabilities competitive with other flagship models while offering faster response speeds. The model is immediately available via the Gemini app, Google Search's AI Mode, and the newly launched "Gemini Spark" AI agent service. The Gemini 3.5 Pro version is slated for release next month.

Gemini Omni: Conversational Video Editing

Also announced is Gemini Omni, a multimodal model that generates high-quality video from text, images, audio, or other video inputs. Its key differentiator is the ability to edit generated video through back-and-forth conversation with the model. It follows last year's viral image generation model "Nano Banana," and Google is hoping for a similar reception in the video domain.

"Gemini 3.5 is not just a language model. It combines frontier intelligence with the ability to take real-world action, autonomously handling complex tasks that previously required human effort."

From Google's I/O announcement

Price Cut: AI Ultra Plan Drops from $250 to $200

Google also revamped its AI subscription pricing. The flagship AI Ultra plan was reduced from $250 to $200 per month. A new $100/month developer-focused Ultra plan was also introduced. Entry-level tiers include AI Plus ($7.99/month) and AI Pro ($19.99/month).

• AI Ultra: $200/month (down from $250 — a 20% cut), unlimited access to top-tier models
• Developer Ultra: $100/month, early access to preview models and API priority
• AI Pro: $19.99/month, general users
• AI Plus: $7.99/month, basic access

Context: GOOGL Up 126% Since Gemini 3.0 in November 2025

This launch builds on the momentum that began when Google released Gemini 3.0 in November 2025 — a moment that reversed Wall Street's narrative that Google was falling behind in AI. The stock has climbed 126% since. Whether Gemini 3.5 extends that run is now the central question.

OpenAI, which held a first-mover advantage following ChatGPT's 2022 debut, has been cutting back on secondary projects to refocus on core AI model development as it faces increasing pressure from Google and Anthropic. With a potential IPO later this year, OpenAI needs to prove its competitive edge. Microsoft (MSFT), as OpenAI's key partner, faces the most direct impact from intensifying AI pricing competition.