OpenAI Partners with Google Cloud to Boost AI Capabilities

SAN FRANCISCO, June 10 (Reuters) – OpenAI is set to expand its computing capacity by collaborating with Alphabet‘s Google Cloud service, sources told Reuters. This unexpected partnership marks a significant shift in the competitive landscape of the artificial intelligence sector.

The deal, finalized in May after months of negotiation, aims to help OpenAI manage the massive computing demands required for training and deploying its AI models. While OpenAI has relied heavily on Microsoft Azure, this move reflects its strategy to diversify its computing sources, notably with its Stargate data center project.

Google’s cloud division will provide additional computing strength to OpenAI, which has faced increasing demand for resources since late 2022. As AI adoption continues to surge, OpenAI’s annualized revenue run rate has positioned it well for financial targets.

One source, who requested anonymity, pointed out that this collaboration is a win for Google’s cloud unit amid rising competition, especially as OpenAI’s ChatGPT challenges Google’s stronghold in the search business. Analysts from Scotiabank noted that while it may seem surprising, it emphasizes the urgent need for both companies to collaborate in meeting substantial computing requirements.

OpenAI’s history of partnerships includes those with SoftBank and Oracle, and the company is also working to create its in-house chips to lessen reliance on external providers. However, the partnership with Google is seen as a crucial step in navigating the competitive challenges posed by its rivals.

Despite these developments, Google must find a balance between its enterprise and consumer markets amid pressure to demonstrate profitability from AI-related investments. With the integration of OpenAI into its customer base, Google Cloud is stepping up its outreach to address the needs of various AI startups.

As for Microsoft, negotiations with OpenAI continue to adjust the terms of their significant investments. Google, however, remains focused on leveraging its advanced hardware, such as tensor processing units, to solidify its position in the cloud market.