OpenAI Is Reportedly Planning To Utilize Google’s Cloud Services

According to a Reuters report, OpenAI has signed an agreement with Google to start using Google’s cloud services to support its expanding computing demands. This move comes as a surprise, considering that the two companies compete in the AI industry.

OpenAI Expands Cloud Strategy Amid Shifting Partnerships and Soaring Compute Demands

The parties have not disclosed the details of the agreement, but reports suggest they have been negotiating it for several months. This development represents OpenAI’s most recent effort to broaden its computing infrastructure beyond Microsoft Azure.

Until January, Microsoft served as OpenAI’s sole data center provider. However, after CEO Sam Altman attributed delays in several product launches to limited computing resources, the company reached an agreement with CoreWeave in March to boost its cloud computing capacity. Analysts valued that deal at nearly $12 billion.

While Microsoft Azure might no longer be OpenAI’s exclusive cloud provider, the two companies continue to maintain a close relationship. OpenAI still significantly depends on Azure, and the firms are currently in discussions to update the terms of their partnership—talks that will likely involve changes to Microsoft’s equity stake in OpenAI.

Nevertheless, this development is undoubtedly a victory for Google Cloud. ChatGPT has emerged as one of the most significant challenges to Google’s search dominance in years, and this agreement could signal a potential thaw in relations between the two firms. Regardless, analysts expect it to bring substantial revenue to Google Cloud, which generated $43 billion last year and accounted for 12 percent of Alphabet’s total revenue. Adding OpenAI as a client is likely to significantly boost those figures.

Google’s Cloud Capacity Questioned as OpenAI Deal Raises Concerns Over Resource Allocation

One obvious concern stands out: Google has long struggled to keep up with demand for its cloud services—even before adding OpenAI to the mix. The bottom line is that it needs more data centers. This raises the question: will OpenAI receive priority access over existing customers? Engadget has contacted Google for comment and will update the story if a response is received.

OpenAI is clearly flourishing. The company recently revealed that, based on current software adoption rates, it is on track to generate $10 billion in annual revenue as of June. It also informed investors of a yearly revenue target of approximately $12 billion—a goal it is expected to reach comfortably with the addition of new subscribers.

Read the original article on: Engadget

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