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Meta signs $10bn cloud partnership with Google

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Louisa Clarence-Smith 

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Meta Platforms has agreed a deal worth more than $10 billion with Alphabet’s Google for cloud computing services, as the race to create artificial intelligence tools creates surprising business partnerships.

Under the six-year agreement, Meta will use Google Cloud’s servers, storage, networking and other services, according to a source.

The deal, which was first reported by The Information, is the first significant cloud computing tie-up between Meta and Google. It underscores how huge computing demands to train and deploy artificial intelligence models are driving agreements between AI rivals.

Shares in Alphabet, the owner of Google, rose $4.83, or 2.4 per cent, to $205.45 on Friday morning in New York, after the deal was first reported.

Shares of Meta gained $15.33, or 2.1 per cent, to $754.42 amid a broader US equities rally after the US Federal Reserve chairman Jerome Powell pointed to a possible interest-rate cut in September.

Mark Zuckerberg, chief executive of Meta, reiterated last month that the Facebook and Instagram owner would spend hundreds of billions of dollars to build AI data hubs. The company raised the bottom end of its annual capital expenditures forecast by $2 billion, to a range of $66 billion to $72 billion in July.

Meta is seeking outside partners to help it fund the infrastructure needed to power AI by offloading $2 billion in data centre assets, the company disclosed in a filing this month.

Meta has poached dozens of AI researchers from OpenAI, Anthropic and Google DeepMind in recent months to work on Zuckerberg’s mission to build what he calls “personal superintelligence”.

Researchers have been offered pay of up to $100 million, according to OpenAI’s chief executive, Sam Altman.

“We are truly only investing more and more into Meta Superintelligence Labs as a company. Any reporting to the contrary of that is clearly mistaken,” Alexandr Wang, Meta’s chief AI officer, said in a social-media post on X on Thursday. Wang was responding to media reports that Meta had frozen hiring in its AI division.

“All that’s happening here is some basic organisational planning: creating a solid structure for our new superintelligence efforts after bringing people on board and undertaking yearly budgeting and planning exercises,” a spokesman for Meta said.

Last month OpenAI, the maker of ChatGPT, also said it expected to use Google’s cloud infrastructure.

AI-related demand helped Alphabet’s cloud-computing unit to deliver an almost 32 per cent jump to $13.6 billion in second-quarter revenue in July.