Meta seals $10 billion cloud deal with Google to supercharge AI race

Meta Platforms Inc., the parent company of Facebook and Instagram, has entered into a landmark cloud computing deal worth at least $10 billion with Alphabet Inc.’s Google.

According to people familiar with the matter, the agreement will provide Meta with access to Google Cloud’s advanced infrastructure, underscoring the social media giant’s aggressive investment in artificial intelligence (AI).

Meta inks first major cloud deal with Google to accelerate AI push

Under the agreement, Meta will pay a minimum of $10 billion over six years to utilize Google Cloud’s servers and storage. This will enable Meta to rapidly expand its computing capacity as it competes with rivals like OpenAI, Microsoft, and Anthropic in the high-stakes race to deliver AI-powered tools for billions of users.

Why the deal matters

This accord represents the first large-scale cloud computing partnership between Meta and Google, a significant development in the cloud industry where Amazon Web Services (AWS) and Microsoft Azure dominate market share, with Google ranked third.

While Meta already operates more than two dozen data centers globally and is building additional facilities — including a massive 4 million-square-foot campus in Louisiana — many of these projects will not be operational for several years. To bridge the gap, CEO Mark Zuckerberg has prioritized immediate access to computing resources, aiming to achieve the highest computing power per AI researcher in the industry.

Google Cloud and Meta’s AI collaboration

Google Cloud has worked with Meta in limited capacities before but never at this scale. In 2023, Google Cloud announced that Meta’s open-source Llama AI model would be available via its Vertex AI platform, enabling businesses and developers to easily build applications using Meta’s models. The new $10 billion agreement takes this collaboration to a much deeper, infrastructure-driven level.

Bloomberg Intelligence analysts Mandeep Singh and Robert Biggar highlighted the deal’s significance in a research note, stating the multiyear agreement “validates Google Cloud’s lower token pricing in comparison to other hyperscalers.” They also noted that Meta will likely continue enhancing the reasoning capabilities of its Llama model, given rising competition from other leading AI models excelling in search, coding, real-time summarization, and language translation.

The bigger picture: AI race intensifies

Zuckerberg has already committed to spending hundreds of billions of dollars on AI research and infrastructure, positioning Meta as a frontrunner in generative AI development. With this latest partnership, Meta gains faster access to computing scale without waiting years for its own massive data centers to come online.

Industry experts suggest this deal could also help Google Cloud narrow the gap with AWS and Azure by showcasing its cost-effectiveness and flexibility in supporting frontier AI models. Meanwhile, Meta stands to benefit from Google’s robust cloud ecosystem, bolstering its ambitions to integrate AI across Facebook, Instagram, WhatsApp, and its future metaverse projects.