For the next six years, Meta will be able to turn to Google Cloud for its computing needs. After gradually reducing its own data center capacity, CEO Mark Zuckerberg’s company is still aiming to build its own AI infrastructure.
Meta recently sold $2 billion worth of data center infrastructure. This was necessary to make room for other investments. Now we can see what that financial muscle looks like: purchasing an enormous amount of capacity from Google Cloud.
Both Meta and Google are investing heavily in the supposed race to AGI (Artificial General Intelligence). Meta recently reorganized its AI division under the new umbrella Meta Superintelligence Labs, consisting of four specialized teams. It has been hunting for talent at competitors, from Google to OpenAI, but has now completed this process. At least, that is how it appears: Meta has announced a hiring freeze.
CEO Mark Zuckerberg announced in July that Meta was increasing its annual capital expenditure to between $66 billion and $72 billion. The company is also looking for external partners to help finance the massive infrastructure for AI development.
Google Cloud gains ground
For Google, the mega deal is another major victory in the battle for market share in the public cloud market. The company achieved 32 percent growth for its cloud division in the second quarter, exceeding expectations. It has been number three behind AWS and Azure since the expansion of GCP more than a decade ago. The gap is wide: Microsoft’s cloud is already about twice as large in terms of market share at 24 percent, while AWS is said to own about a third of the total public cloud market worldwide.
The new deal follows an earlier major agreement with OpenAI, in which Google Cloud also provides computing power to a direct competitor in the AI field. The strategy of being both competitor and partner seems to be paying off. CEO Sundar Pichai’s company is likely to be able to separate the interests of the AI race and the cloud market. After all, a paying customer is a paying customer.
Strategic collaboration between rivals
According to sources at The Information, Meta will use Google’s full suite of cloud services. Details are somewhat sparse, as it is said to involve hardware, networking, and storage, but that is to be expected from full cloud usage by a major tech player such as Meta. The purchase of capacity cannot be viewed separately from Meta’s plans to build self-sufficient AI capacity, a project that will take years. In any case, it diversifies the social media company’s hardware capabilities, which is a logical move.