Google ChatGpt creator OpenAI deal inked? What we know so far

OpenAI plans to add Alphabet's Google cloud service to meet its growing needs for computing capacity, three sources told Reuters, marking a surprising collaboration between two prominent competitors in the artificial intelligence sector. The deal, which has been under discussion for a few months, was finalized in May, one of the sources added. It underscores how massive computing demands to train and deploy AI models are reshaping the competitive dynamics in AI, and marks OpenAI's latest move to diversify its compute sources beyond its major supporter Microsoft, including its high-profile Stargate d ata center project, as per a report.

It is a win for Google's cloud unit, which will supply additional computing capacity to OpenAI's existing infrastructure for training and running its AI models, sources said, who requested anonymity to discuss private matters. The move also comes as OpenAI's ChatGPT poses the biggest threat to Google's dominant search business in years, with Google executives recently saying that the AI race may not be winner-take-all, Reuters reported.

OpenAI, Google and Microsoft declined to comment. Since ChatGPT burst onto the scene in late 2022, OpenAI has dealt with increasing demand for computing capacity - known in the industry as compute - for training large language models, as well as for running inference, which involves processing information so people can use these models.


OpenAI said on Monday that its annualized revenue run rate surged to $10 billion as of June, positioning the company to hit its full-year target amid booming adoption of AI. Earlier this year, OpenAI partnered with SoftBank and Oracle on the $500 billion Stargate infrastructure program, and signed deals worth billions with CoreWeave for more compute. It is on track this year to finalize the design of its first in-house chip that could reduce its dependency on external hardware providers, Reuters reported in February.

The partnership with Google is the latest of several maneuvers made by OpenAI to reduce its dependency on Microsoft, whose Azure cloud service had served as the ChatGPT maker's exclusive data center infrastructure provider until January. Google and OpenAI discussed an arrangement for months but were previously blocked from signing a deal due to OpenAI's lock-in with Microsoft, a source told Reuters.

Microsoft and OpenAI are also in negotiations to revise the terms of their multibillion-dollar investment, including the future equity stake Microsoft will hold in OpenAI. For Google, the deal comes as the tech giant is expanding external availability of its in-house chip known as tensor processing units, or TPUs, which were historically reserved for internal use. That helped Google win customers including Big Tech player Apple as well as startups like Anthropic and Safe Superintelligence, two OpenAI competitors launched by former OpenAI leaders.

Google's addition of OpenAI to its customer list shows how the tech giant has capitalized on its in-house AI technology from hardware to software to accelerate the growth of its cloud business.

FAQs

Q1. What do we know about Google's DeepMind AI?
A1. Google's DeepMind AI unit also competes directly with OpenAI and Anthropic in a race to develop the best models and integrate those advances into consumer applications.

Q2. What do we know about Google Cloud?
A2. Google Cloud, whose $43 billion of sales comprised 12 per cent of Alphabet's 2024 revenue, has positioned itself as a neutral arbiter of computing resources in an effort to outflank Amazon and Microsoft as the cloud provider of choice for a rising legion of AI startups whose heavy infrastructure demands generate costly bills.