Meta signs $10 billion Google Cloud computing deal amid AI race

Meta Platforms Inc. has agreed to a deal worth at least $10 billion with Alphabet Inc.’s Google for cloud computing services, according to people familiar with the matter, part of the social media giant’s spending spree on artificial intelligence. 

Facebook and Instagram’s parent company will pay a minimum of $10 billion over six years to use Google Cloud’s servers and storage in an effort to quickly bring online more computing power as it competes in the race to offer users AI tools, according to the people, who asked not to be named discussing details of the agreement that remain private. 

The accord marks the first major cloud computing deal between Meta and Google, which ranks third in the market behind Amazon.com Inc.’s AWS and Microsoft Corp.’s Azure. The Information earlier reported news of the agreement. Google confirmed the deal but didn’t have further comment. Meta declined to comment.

Meta Chief Executive Officer Mark Zuckerberg has pledged to spend hundreds of billions of dollars on AI and the infrastructure needed to support it. While the company has more than two dozen of its own data centers, and is actively constructing more — including a 4 million-square-foot project in rural Louisiana — some won’t come online for years. Zuckerberg is seeking to amass the most computing power per AI researcher, and wants to do so quickly.

Google Cloud has worked with Meta in the past, though never before as a formal cloud infrastructure provider. In 2023, Google Cloud announced that it would make versions of Meta’s open-source AI model, Llama, available through an app developer platform called Vertex AI — part of Google Cloud’s strategy to position itself as a flexible, “one-stop shop” for AI. The distribution deal meant businesses and developers could use Google Cloud to easily access and build applications with Meta’s AI models. Meta has also done some smaller experiments with Google Cloud technologies in the past.

Bloomberg Intelligence analysts Mandeep Singh and Robert Biggar said in a note on Thursday that the multiyear deal “validates” Google Cloud’s lower token pricing in comparison to other hyperscalers. Meanwhile, “Meta is likely to focus more of its efforts on improving the reasoning capabilities of its Llama model, given the traction of other frontier models in search, coding agents and real-time summaries and language translation,” the analysts wrote.