OpenAI will reportedly start using Google's cloud servers

OpenAI has inked a deal with Google to begin using the latter's cloud service to meet its growing needs for increased computing capacity, according to a report by Reuters. This is something of a surprise, given that Google and OpenAI are rivals in the AI space.

The terms of the deal remain unknown, but reporting indicates it has been in the negotiation phase for the past several months. This marks OpenAI's latest move to diversify its compute sources away from Microsoft Azure.

Microsoft had been OpenAI's exclusive data center provider until January, after OpenAI CEO Sam Altman blamed the lack of compute capacity for the delay of several products. The company made a deal in March with CoreWeave to provide increased cloud compute capacity. That deal was worth nearly $12 billion.

Microsoft Azure may no longer be the exclusive cloud provider for OpenAI, but it's not as if the two companies have parted ways. OpenAI still relies heavily on Azure and the corporations are currently in negotiations to revise the terms of their partnership, which will likely revise the equity stake Microsoft holds in OpenAI.

However, this is certainly a win for Google Cloud. ChatGPT poses the biggest threat to Google's search business in years, and this deal could indicate a softening between the two companies. In any event, it'll certainly bring a whole lot of money into Google Cloud's coffers. The platform made $43 billion last year and accounted for 12 percent of parent company Alphabet's overall revenue. The addition of OpenAI to its customer portfolio will likely extend those numbers dramatically.

There is an elephant in the room. Google has famously struggled to meet customer demand for its cloud services, and this was before bringing on OpenAI. Simply put, it needs more data centers. Will OpenAI get priority access over pre-existing customers? Engadget has reached out to Google and will update this story if we hear back.

To that end, OpenAI is certainly thriving. The company recently announced that the current adoption rate of its software will lead to $10 billion in annual revenue as of June. It told investors that it has a target revenue goal of around $12 billion for the year, which it should easily meet with new subscribers.

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