Meta is betting large on AI, agreeing to spend greater than $10 billion on Google’s cloud companies over the following six years, based on individuals conversant in 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 Info.
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 corresponding to OpenAI and Apple with excessive pay gives, and he has spoken incessantly about what he calls “AI superintelligence.”
“I’m excited to construct private superintelligence for everybody on the planet,” Zuckerberg informed traders throughout an earnings name final month.
The spending spree underscores how central AI has turn out to be to Meta’s future. The corporate is pouring billions into its infrastructure to assist initiatives corresponding to its Llama household of AI fashions and new options throughout its social platforms.
Meta’s AI prices and daring projections
Meta reported sturdy ends in the second quarter and sharply raised its capital expenditures to $17 billion, with most of that going to AI-related investments. Wanting forward, the corporate expects to spend between $66 billion and $72 billion in 2025.
General 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 robust quarter “gained’t defend Meta from questions in regards to the firm’s future because it breathlessly tries to maintain up within the AI race,” mentioned Minda Smiley, an analyst at Emarketer.
Google’s pursuit of cloud development
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 father or mother firm, mentioned in July that its cloud division generated $13.6 billion in income and $2.83 billion in working earnings in the course of the second quarter. That marked income development of 32%, nicely forward of the corporate’s total development 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 previous 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 targeted largely on AI infrastructure, based on one individual conversant in the phrases. Meta’s want for extra computing energy is anticipated 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 improvement, with Meta’s purpose being to make AI obtainable to its billions of customers. However the monumental price 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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