Google has struck an unexpected partnership with its fiercest AI rival, OpenAI, offering cloud infrastructure and advanced GPUs to support the startup’s growing computing needs.
The arrangement, finalised in May 2025 after months of negotiations, went live this quarter, making OpenAI one of Google Cloud’s biggest customers to date.
Sundar Pichai, CEO of Google, confirmed the deal during Alphabet’s second-quarter earnings call, stating:
“We are very excited to be partnering with them on Google Cloud. Google Cloud is an open platform, and we have a strong history of supporting great companies, startups, AI labs, etc. So super excited about our partnership there on the cloud side, and we look forward to investing more in that relationship and growing that.”
OpenAI’s demand for compute has surged to historic levels, with projections indicating over one million GPUs will be online by the end of 2025. Its longer-term goal involves scaling to 100 million GPUs over the next decade.
This explosive growth has outpaced Microsoft Azure’s capacity, the company’s primary cloud partner, forcing OpenAI to look elsewhere.
Google Cloud, once kept at arm’s length by OpenAI due to its rivalry with Microsoft and shared ambitions in AI, now enters the scene with a compelling offer: access to Nvidia’s top-tier H100 and GB200 GPUs, custom-built TPUs, and a mature infrastructure trusted by leading AI research outfits including Anthropic, Fei-Fei Li’s World Labs, and Ilya Sutskever’s Safe Superintelligence.
The exclusivity OpenAI once held with Microsoft ended quietly in January 2025. Under the new “right of first refusal” framework, OpenAI gained the freedom to diversify its backend.
The company’s operations now span data centres in Oregon, Iowa, Frankfurt, Milan, Singapore, and Tokyo, optimised for low-latency inference and strict sovereign compliance. Workloads are split across Azure and Google Cloud using orchestration tools like Kubernetes, Anthos, and Istio.
This development reveals the pressure OpenAI faces in scaling its services while maintaining uptime, responsiveness, and sustainability commitments. Both firms have pledged to power AI workloads with 100% carbon-free energy, and will publish energy transparency metrics in line with grid-optimised strategies.
While OpenAI remains the most direct threat to Google’s crown jewel, Search, the economic logic behind this partnership is clear. Google Cloud posted a $13.62 billion revenue haul in Q2 2025, up 32% year-on-year.
Much of that growth comes from AI workloads, prompting Alphabet to raise its capital expenditure target for the year to $85 billion, noting “strong and growing demand” across both AI and cloud services.
Still, the optics are awkward. OpenAI’s ChatGPT product has chipped away at Google’s dominance in Search, forcing the tech giant to hasten development on its own generative AI offerings like Gemini.
That chatbot now reaches 450 million monthly users, while AI Overviews on Search reportedly sees 2 billion monthly users. But the monetisation strategy behind those products is not well explained.
Some analysts are comparing this move to Google’s early relationship with Yahoo, when it quietly powered Yahoo Search in its early days, only to displace it as the internet’s front page.
Hopefully, history will not repeat itself.
