One of Google's biggest AI threats is now on its client list?

Phone Arena

a day ago

The AI world is easily one of the most competitive parts of tech right now, with companies constantly battling to one-up each other. And at the center of that race? OpenAI and Google – two companies that have been neck and neck for a while. So, it is pretty surprising to hear that the two are reportedly working together behind the scenes.Yep, according to a recent report, OpenAI, ChatGPT's creator, plans to start using Google Cloud to meet its insane compute demands – a move that basically teams up two companies that have been head-to-head in the AI race. The deal has apparently been in the works for months and was finalized back in May.This potential deal highlights just how intense the computing needs have become in AI. Running massive models like ChatGPT takes a ton of processing power – not just for training but also for handling real-time usage (aka inference). Google Cloud stepping in is a big win for Google's cloud business. Even though OpenAI's ChatGPT is seen as the biggest threat to Google Search in years – especially after OpenAI launched its own search feature – Google seems to be prioritizing growing its cloud revenue and flexing its muscle in AI hardware and infrastructure.
Last year, OpenAI launched its own search feature. | Image credit – OpenAI
Its cloud unit pulled in $43 billion in 2024 and made up 12% of Alphabet's (Google's parent company) revenue, and it is aiming to become the top cloud provider for AI startups that need serious computing firepower. On the flip side, OpenAI's move to work with Google is part of a broader strategy to lessen its dependence on Microsoft. For a long time, Microsoft Azure was OpenAI's go-to cloud provider, thanks to a deep partnership that also included major investments.
But now, OpenAI seems to be branching out. Not only is it reportedly renegotiating its existing deal with Microsoft – including how much ownership Microsoft will continue to hold – it's also building its own custom AI chips. The goal here is pretty obvious: OpenAI wants more control over its tech stack and doesn't want to rely entirely on any one partner. That push for independence goes beyond just Google. OpenAI is also working on the huge $500 billion Stargate AI infrastructure project, which is backed by SoftBank and Oracle. On top of that, it's inked a multibillion-dollar deal with CoreWeave, another big cloud provider. So this new partnership with Google isn't a one-off move – it's part of a much larger play to spread out its infrastructure bets.What makes the OpenAI-Google collaboration even more interesting is that earlier attempts to work together were reportedly blocked because of OpenAI's exclusive deal with Microsoft. Now that those restrictions have eased, OpenAI is bringing Google into the mix – and Google, in turn, is adding one of its most high-profile rivals to its list of cloud clients.
The whole thing shows just how complex the AI space is right now. Sure, these companies are rivals, but when it comes to infrastructure, they still need each other. Apple is reportedly doing the same, turning to Google Cloud to support its own AI efforts.
Even though ChatGPT continues to outpace Google's chatbot in terms of users – and analysts say it could eventually eat into Google's search dominance – this latest move makes one thing clear: Google's ecosystem is still way too massive for OpenAI to go it alone without tapping into it.
In the end, the AI race isn't just about building the smartest chatbot – it is about having the resources to keep it running. And right now, Google has a lot of that to offer, even to its biggest rivals.