Meta is betting huge on AI, agreeing to spend greater than $10 billion on Google’s cloud companies over the following six years, in accordance with individuals aware of the deal. The association, which incorporates servers, storage, networking, and different infrastructure, marks one of many largest agreements in Google Cloud’s 17-year historical past.
Neither firm would touch upon the deal, which was first reported by The Data.
AI ambitions driving spending
Meta chief govt Mark Zuckerberg has been open about his ambitions for synthetic intelligence. In latest months, he has recruited researchers from rivals akin to OpenAI and Apple with excessive pay gives, and he has spoken ceaselessly about what he calls “AI superintelligence.”
“I’m excited to construct private superintelligence for everybody on the earth,” Zuckerberg informed buyers throughout an earnings name final month.
The spending spree underscores how central AI has develop into to Meta’s future. The corporate is pouring billions into its infrastructure to help initiatives akin to its Llama household of AI fashions and new options throughout its social platforms.
Meta’s AI prices and daring projections
Meta reported robust ends in the second quarter and sharply raised its capital expenditures to $17 billion, with most of that going to AI-related investments. Trying forward, the corporate expects to spend between $66 billion and $72 billion in 2025.
Total bills for the yr are projected between $114 billion and $118 billion, with Meta warning that AI initiatives will drive even increased prices into 2026.
A powerful quarter “gained’t protect Meta from questions in regards to the firm’s future because it breathlessly tries to maintain up within the AI race,” stated Minda Smiley, an analyst at Emarketer.
Google’s pursuit of cloud progress
For Google, the settlement displays a push to safe giant cloud contracts because it tries to shut the hole with Amazon Net Providers and Microsoft Azure. Earlier this yr, Google additionally gained cloud enterprise from OpenAI, which had beforehand relied on Microsoft’s Azure platform.
Alphabet, Google’s mum or dad firm, stated in July that its cloud division generated $13.6 billion in income and $2.83 billion in working earnings through the second quarter. That marked income progress of 32%, properly forward of the corporate’s general progress fee of 13.8%.
Meta and Google: rivals in advertisements, companions in AI
Whereas Meta and Google compete fiercely in internet marketing, the brand new deal exhibits how AI calls for are reshaping outdated rivalries. Meta has lengthy constructed its personal knowledge centres however is more and more turning to outdoors suppliers to deal with the size of its AI initiatives. Along with Google, it has already dedicated to utilizing companies from Amazon and Microsoft.
The most recent deal is concentrated largely on AI infrastructure, in accordance with one particular person aware of the phrases. Meta’s want for extra computing energy is predicted to develop because it trains bigger AI fashions and integrates them throughout its merchandise.
Zuckerberg has described this decade as a transformative interval for AI growth, with Meta’s purpose being to make AI out there to its billions of customers. However the huge value of that ambition is drawing scrutiny, at the same time as Meta deepens its reliance on the very firms it competes with in different markets.
(Photograph by Dima Solomin)
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