Gotta love the disclaimer at the bottom:

  Microsoft remains OpenAI’s primary cloud partner.

Things that you only say because you are contractually forced to say them.

Or don't want to crash stock price.

OpenAI buys from Azure because of the Microsoft investment deal.

OpenAI sells and reaches enterprise customers via GCP.

Enterprises want zero data retention guarantees and they're already on AWS or GCP, so this is how OpenAI reaches those customers and makes more money.

Microsoft has had ZDR for inference since pretty much the beginning. Just needed to fill out a form and get approved.

However, consider this:

> Enterprises with Google Cloud spend commitments will be able to draw down their GCP commitments for these purchases.

isn't the largest portion of openAI's reach to (overwhelming cloud provider leader AWS) enterprise customers via amazon bedrock?

OpenAI only launched on bedrock ~3 months ago, so I doubt it. It has been running on azure since day 1.

Isn't Google renting cloud compute from XAI?

Yep, and they pay them like 900 mil per mo for it, pretty crazy from the company that first brought TPUs to market

Google also has a stake in xAI... so they are financing themselves too

That’s putting it lightly. Google was one of the biggest early investors in SpaceX and is currently the second largest shareholder after Musk.

AI centipede

string theory Ouroburos

> Enterprises with Google Cloud spend commitments will be able to draw down their GCP commitments for these purchases.

This is a fairly big move by Google... It means revenue they have already booked and reported to shareholders they now might have to give away - potentially all of it. Bean counters hate that!

“Reported to shareholders” doesn’t really mean anything. There are thousands of such line items on financial reports. The ones that matter, such as recognized revenue, don’t count future bookings. It is understood that customers renege on these commitments all the time.

Google is simply telling customers - there’s a new Google Cloud service, and you can use it under your existing account.

Let's not quite right... you don't recognize revenue in a consumption business until the usage actually happened

pretty sure that's what the "spend commitment" changes. It's a "use it or lose it" agreement. It's as good as a debt the moment it is signed, used or not.

GAAP does not permit booking contracted future revenue onto the balance sheet or income statement, because the spend is not actually an unconditional debt until the service has been rendered.

It doesn't matter if it's committed or not, it still won't be recognized on the formal financial statements.

I think they declare it as pipeline revenue or something instead of current year revenue

Sergey better really go into "founder mode" or else Thomas Kurian (head of GCP) will continue to eat Deepmind's lunch.

Between selling TPUs to external companies and now hosting competitor models, Gemini just doesnt have the full faith of the Alphabet capital allocators, and I can't really blame them. A mature company like google would rather just expand their extremely profitable cloud business rather than dump billions into a black hole on the off chance they achieve RSI or superintelligence or whatever.

> Our cloud business is at any given moment in time forgoing short-term revenues because we are making compute trade-offs to support frontier AI development

Sundar Pichai just this week.

https://finance.yahoo.com/technology/ai/articles/google-ceo-...

What does “capital allocators” mean here? If your implication is that the Gemini org is resource starved and a few extra dollars will put their model in the lead that is 100% incorrect. If anything it’s the bloat and bureaucracy keeping it behind.

Signing partnerships and hosting third party models costs Google nothing, and in fact brings in a ton of revenue that will eventually go back into Gemini.

Infra might very well be the right play. Over the past year, it seems like the evidence is on the side that there's no "secret sauce" in AI, and models will all converge towards similar capabilities. Not much margin to be had for having the best model for a month or less until another lab leapfrogs you by 3%.

Google uses Gemini for its AI Overview on Google Search results, though. And it seems to me that this is an area where they really have a big incentive to run their own AI that they completely control. AI Overview sits at the top of the Google Search results first page, so when it comes to marketing it's sitting in the most coveted place on the entire Internet.

im talking about research compute allocation

It's also marketing that their AI is hilariously terrible because AI Overview is the biggest posterchild for AI slop and often used as an example of how bad Google is at AI. Gemini proper isn't that bad, just the ultra cost cutting version on search is.

It has gotten a lot better and it's useful for information on most normal search queries now.

To be fair the search version of Gemini is nowhere near as bad as it used to be. The bar is in the floor I know.

I don't understand all the wild speculation and question here - openai is selling a shit ton of inference through third parties. these third parties want to provide inference to their customers who use gcp (and don't want to also inference through bedrock or azure ai foundary.

these are all zdr engagements and thus "enterprise" contracts.

basically it boils down to - anthropic already provides inference direct through GCP, Azure, and AWS - so to compete openai is doing the same.

Preparing for Oracle bankruptcy.

There's always a silver lining!

I could only hope...

How are they trusting Google not to destill them

This is speculation, but funnily enough Gemini models show the least evidence of being distilled from OAI or Anthropic compared to everything else in the market.

I feel this is correct. Google has probably the most data of any company in the world. For better or worse, they don't need to train on the outputs of other models.

GCP already hosts Anthropic models so probably trusts and lawyers.

Probably a very strict contract, and letting OpenAI read all the session logs like they do for their own customers.

Nvidia GPUs let you load encrypted weights onto them and to decrypt on chip so Google would need to have some sort of Nvidia management firmware attack to read from HBM while the GPU is live

Distillation does not require access to weights.

Isn't distillation more of a black box type affair?

Doesn’t really matter what happens at the GPU level when Google can see all API traffic.

Google has both. Afaik we don't know whether OpenAI models will run on TPUs or GPUs here.

I bet it would be the NVIDIA, at least initially, not for the encryption capability per se, but for simple fact that adapting to TPU at high performance is non-trivial.

First answer this: How are they trusting OpenRouter not to distill them?

Open router doesn't host the models, so they wouldn't have access to the weights or reasoning traces right?

They can still collect (input,output) pairs.

America is a high-trust society.

Japan is a high-trust society. America is the opposite.

The US is medium trust.

Everything is relative, but fair enough.

More like - America is a high-litigation society.

I don't believe threat of litigation alone explains the extent of it.

The way an American company, esp a reputable one like Google, conducts itself internally is different. There will be much more internal backlash to do the wrong thing way before litigation.

Contracts and lawyers are more powerful than any technical tool.

Yeah like the copyright lawyers of content owners that got their works trained on?

How many trillions of dollars were those content owners worth?

Enough. They just weren’t working in coordination.

You are vastly overestimating the power of publishers. The top book publisher in the US is worth $5 billion. All publishers together are about $50 billion. The New York Times is $11 billion. Fox is about $15-25 billion. Add together every single book publisher, newspaper, magazine, TV/radio, digital publisher and really every print and broadcasting platform in the country and you’d reach about $100-$150 billion. That is roughly 3% of Google.

These companies have a ton of cultural capital, sure, but in American capitalism that means nothing.

Google Cloud couldn't give a shit about Google Deepmind, and backdooring Clouds customers only stands to hurt Cloud.

Google Search is still a large fraction of Alphabet's revenue, and Alphabet needs to be able to deliver AI results for people's searches if it wants to stay relevant in the search game.

I imagine it's much easier to have fine grained control over AI search results if you develop and own the AI yourself.

I was thinking about them fine-tuning the results for marketing purposes. But I just did a bit of research and it seems that would probably actually be illegal. So never mind, maybe?

And Google is renting compute from SpaceX.

Google is the second largest shareholder of SpaceX.

We need a new acronym

Google, NVIDIA, OpenAI, MSFT…

GNOM…oh wait no

The strategy that I’ve heard said out loud now by all the major technology companies is “we’re all doing it (AI) together”

In my view this was more or less the political result of the White House summit

So I think we’re seeing what is basically going to be a giant amorphous set of collaborations such that nobody gets taken down, and the whole market doesn’t collapse

If Alphabet, OAI, MSFT, AMZ…etc all agree to be interoperable then they will be acting more or less as a single body in tension.

Whether that’s good or not is a question of your worldview but I think that’s the strategy

Add Anthropic and you get MANGO. MSFT, Anthropic, NVIDIA, Google, OpenAI.

Let’s go with Mango!

Giant companies working together isn’t an AI-age phenomenon. Go back 10, 20, 30 years and you’ll see that despite the public perception of competitiveness all the largest tech companies (Apple, Microsoft, Google, Samsung, Amazon) buy/sell to each other, sign partnerships and have tight economic interdependencies.

Who said it’s new? :)

However if you look at the trust busting era what preceded it was this exact kind of private “cooperation” to prevent government involvement

This is like that SNL skit with Tim Meadows where Will Ferrell has the F on his shirt on the kids TV show and keeps getting in the inappropriate order

Add in Meta (Muse app is a winner)

MOM-NG GNOMM NGMOM MGNOM MGMNO MGMON ONMGM NOMGM NOMMG

GCP has been hosting Anthropic models for a while.

Google owns Anthropic stock.

Why would it? The point of Gemini is provide user facing services cheaper than if they were paying OpenAI, make some money on the side with API credits and position themselves as a leader when investors want to see AI everywhere.

Google Cloud is competing with AWS. Amazon has Bedrock so Google needs to keep up with them by serving both Claude and GPT, along with Gemini and open models.

No? Why would you think that’s the case? Gemini fills its own niche

Gemini and GPT fill the same niche. They are direct competitors.

New to Google?

Prediction: google cloud will pivot to being a hyperscaler versus a model + hyperscaler. Kind of like how xAI started hosting anthropic workloads with colossus cluster.

bc the alpha is not the model, the alpha is having the physical infra (chips, power, etc).

A company is allowed to do two things

But x.ai also hosts Grok? Why would google stop developing their own models? I think you're right that Google will try to make money from their infrastructure (that's basically what Google Cloud is too).

As much as I like Elon, if Grok was a hero shooter its concurrent steam player count will be in low hundreds.

>Kind of like how xAI started hosting anthropic workloads with colossus cluster.

Google has been hosting part of Anthropic's load long before that deal. They had a big degradation due to compiler bug for TPUs in an optimization they made to work around TPUs not being able sample from the logits efficiently.

Is that a long term prediction? Are you saying that physical infra will always lag demand from here on?