
OpenAI Shocks Tech World with New Google Cloud Deal Amid Intense AI Rivalry
2025-06-10
Author: Ting
In a surprising twist in the tech landscape, OpenAI has secured a major deal with Google Cloud to utilize its powerful cloud computing infrastructure for AI development, despite the fierce competition between the two giants. This agreement, finalized in May after extensive negotiations, represents a pivotal change in OpenAI's strategy to broaden its cloud computing resources beyond its long-standing partner, Microsoft Azure.
Historically, Microsoft has backed OpenAI since 2019, making significant investments in both 2021 and 2023. However, recent reports indicate that OpenAI has been scouring for additional data center resources, citing an urgent need for faster AI data center servers than what Microsoft could supply.
The newly minted partnership with Google Cloud aims to bolster OpenAI's computing capacity, crucial for training and operating its AI models. With OpenAI's annual revenue skyrocketing to $10 billion as of June, the need for more computational power has never been greater.
This alliance underscores a fascinating reality in the tech world: even bitter rivals can join forces when the circumstances are right. Though Google's DeepMind unit competes head-to-head with OpenAI in the AI space, some experts assert that the current AI race may not result in a single winner.
As the rivalry heats up, OpenAI’s ChatGPT poses a significant hurdle for Google's traditional search business. Yet, Google's CEO recently suggested the tech landscape might allow for multiple players to thrive.
Alongside the Google deal, OpenAI is aggressively expanding its computing infrastructure through ambitious projects such as the $500 billion Stargate initiative with SoftBank and Oracle, as well as billion-dollar agreements with CoreWeave. The company is also venturing into hardware development with plans for its first in-house chip, aiming to lessen reliance on external suppliers like Nvidia.
Simultaneously, Microsoft and OpenAI are in talks to revise their lucrative investment terms, potentially altering Microsoft's equity stake in OpenAI. Sources revealed that discussions between Google and OpenAI had been ongoing for months, previously hampered by OpenAI's exclusive contract with Microsoft.
Google's Strategic Cloud Gamble in the AI Race
For Google, bringing OpenAI on board as a client marks a significant step in its cloud strategy, particularly as it leverages its own tensor processing units (TPUs) to enhance its cloud services. These specialized chips, designed to accelerate AI tasks, have proven attractive to high-profile customers, including Apple and Anthropic.
With Google Cloud generating $43 billion in sales, accounting for 12% of Alphabet's projected revenue, the company is positioning itself as a premier provider of computing resources, especially for AI startups. This strategy puts it in competition with giants like Amazon and Microsoft, although supplying OpenAI may constrain Google's chip resources while simultaneously bolstering a formidable competitor.