Meta Signs $10B Google Cloud Deal to Boost AI Growth
According to people familiar with the agreement, Meta is placing a large bet on artificial intelligence by committing to spend over $10 billion on Google’s cloud services over the next six years. This agreement marks one of the largest in Google Cloud’s 17-year journey, spanning servers, storage, networking, and related infrastructure.
The Information was the first to report on the deal, but neither business would comment.
AI Aspirations that Drive Expenditure
Mark Zuckerberg, the CEO of Meta, has been transparent about his aspirations regarding artificial intelligence. He has made high-paying offers to researchers from competitors like Apple and OpenAI in recent months, and he has regularly discussed what he refers to as “AI superintelligence.”
At last month’s results call, Zuckerberg told investors, “I’m eager to build personal artificial intelligence for everyone in the world.”
Meta’s heavy investment highlights how crucial AI is to shaping its future. To support initiatives such as its Llama family of AI models and new features on its social media platforms, the business is investing billions in its infrastructure.
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Meta’s Ambitious Forecasts and AI Expenses
In addition to announcing impressive second-quarter profits, Meta increased its capital expenditures to $17 billion, with the majority of the funds allocated to investments in artificial intelligence. In 2025, the business anticipates spending between $66 billion and $72 billion.
The year’s total costs are expected to range from $114 billion to $118 billion, and Meta has warned that AI programs would push costs much higher until 2026.
According to Emarketer analyst Minda Smiley, a successful quarter “won’t shield Meta from questions concerning the company’s future as it breathlessly tries to keep up in the AI race.”
Google’s Efforts to Expand Its Cloud
The deal demonstrates Google’s desire to secure significant cloud contracts in an effort to catch up with Microsoft Azure and Amazon Web Services. Earlier this year, OpenAI, which had previously depended on the Microsoft Azure platform, lost its cloud business to Google.
Alphabet, the parent company of Google, reported in July that its cloud segment generated $2.83 billion in operating profit and $13.6 billion in revenue during the second quarter. That represented a 32% increase in sales, significantly higher than the corporation’s overall 13.8% growth rate.
Google and Meta: Allies in AI, Competitors in Advertising
Although Google and Meta are major competitors in online advertising, the recent agreement demonstrates how AI-driven needs are changing long-standing conflicts. Although Meta has traditionally built its own data centres, the company is increasingly relying on outside vendors to manage the scope of its AI initiatives. It has already agreed to use services from Microsoft and Amazon in addition to Google.
A source familiar with the matter revealed that the new deal primarily targets AI infrastructure. As Meta trains larger AI models and incorporates them into its products, it is anticipated that its demand for greater processing power will increase.
According to Zuckerberg, this decade is a turning point in the development of AI, and Meta wants to make AI accessible to its billions of users. However, even as Meta increases its dependence on the very businesses it faces competition from in other areas, the vast expense of that ambition is being scrutinised.