Meta And Google Cloud Sign $10 Billion Deal, Reports Find

Meta Platforms has signed a 6 year agreement with Google worth at least $10 billion, according to The Information as well as Bloomberg, who had reported that it was confirmed by Google. The contract will see Meta use Google Cloud’s servers, storage, networking and other services to power AI workloads.

The two companies have long been rivals in online advertising, but this would be their first large cloud infrastructure agreement. People familiar with the deal told Bloomberg that Meta will pay a minimum of $10 billion over 6 years to access Google’s cloud capacity. Both companies declined to give detailed comment beyond confirmation of the contract.

Meta already uses cloud services from Amazon Web Services and Microsoft Azure, but its own facilities are stretched. The company runs more than two dozen data centres and is building more, yet some of these sites will take years before they are ready. Turning to Google gives Meta a way to bring computing power online quickly.

 

What Does This Mean For Meta’s AI Projects?

 

Mark Zuckerberg has pledged to invest hundreds of billions of dollars in AI. He recently told investors that the company wants to “build superintelligence” and expects capital expenditure to reach between $66 billion and $72 billion this year. That number is set to go up further in 2026 as Meta develops massive clusters of computing infrastructure known as Prometheus and Hyperion.

The company disclosed earlier this month that it had sold $2 billion worth of data centre assets and is looking for partners to finance more construction. Reports also said Meta has secured backing from Pimco and Blue Owl for its building drive. Temporary measures have even included housing computing capacity in tents.

Zuckerberg has said he wants Meta to have the most computing power available per researcher in the AI field. Bringing in Google Cloud helps close the gap between current capacity and those ambitions. Analysts told Bloomberg that Meta is also expected to put more work into strengthening the reasoning capabilities of its Llama model, which competes with other frontier systems in search, coding, and translation.

 

 

How Is Google Cloud Benefiting?

 

For Google, the deal adds a large and steady stream of income at a time when its cloud division is growing quickly. Revenue from Google Cloud in the last quarter increased 32% to $13.6 billion. The business backlog rose 18% compared with the previous quarter and 38% compared with the previous year, reaching $106 billion.

Google Cloud ranks third in market share behind AWS and Azure, but the Meta agreement helps underline its position as a serious supplier. The division already works with OpenAI, which signed a contract in June to use Google’s computing resources, including its custom Tensor Processing Units. Some of that work is outsourced to CoreWeave.

In 2023, Google Cloud also announced a deal to distribute Meta’s open source AI model Llama through its Vertex AI platform. That partnership allowed developers to build applications with Meta’s models through Google’s infrastructure. The new contract takes the relationship further, moving from distribution to bigger infrastructure hosting.

 

What Do The Results Say About Both Companies?

 

Both Meta and Google reported strong results in their most recent quarters. Meta recorded revenue of $47.5 billion, up 22% from the previous year. Google’s parent Alphabet said its cloud division alone brought in $13.6 billion, while overall group figures were also healthy.

These results are an indication that there’s demand for AI services and the infrastructure that powers them. Companies across the technology sector are spending hundreds of billions of dollars on cloud capacity, data centres, and advanced chips.

For Meta, the Google deal shows the urgency of securing enough resources to compete in the AI race. For Google, it is a chance to place itself as a reliable host for clients that are themselves strong rivals in other business areas.