On the 10th, Reuters reported that OpenAI, the developer of ChatGPT, is adopting Google’s cloud services, its biggest competitor in artificial intelligence (AI).
Sources stated that OpenAI has recently entered into a cloud service agreement with Google to meet the enormous computing demands necessary for training and operating its AI models. The specific terms of the contract have not been disclosed, and this agreement was finalized last month after months of discussions, according to the sources.
This is another measure by OpenAI to diversify its computing resources, in addition to its largest partner, Microsoft (MS). OpenAI announced the ‘Stargate’ data center project, worth billions of dollars in the U.S., along with SoftBank and Oracle last January. Although OpenAI had been utilizing MS's Azure cloud as its exclusive infrastructure under its contract with MS, it is now expanding contracts with other companies following the expiration of that contract in January.
Satya Nadella, CEO of MS, recently noted in an interview that he hopes MS and OpenAI will partner in various ways for decades to come and that both OpenAI and MS can have other partners.
In particular, this contract is attracting attention since OpenAI and Google are the biggest competitors surrounding AI technology. By launching ChatGPT in November 2022, OpenAI struck a blow against Google, which was then considered the leader in AI technology, and is now threatening Google’s global search, which holds a 90% market share, with ChatGPT. Through this contract, OpenAI will receive additional computing capabilities necessary for training and executing its ChatGPT model from Google, and Google will have OpenAI as a customer, leading the AI boom.
Canadian investment bank Scotiabank emphasized in an investor note that this agreement is “somewhat surprising” and could provide further growth opportunities for Google’s institutional sector, while also mentioning the threat that ChatGPT poses to Google Search.
Scotiabank evaluated that “this agreement demonstrates that both companies are collaborating to meet substantial computational demands despite intense competition,” adding, “We view this as a significant victory for Google’s institutional sector, but at the same time, concerns persist that ChatGPT is increasingly threatening Google's dominance in search.”