0.000000 2.800000 Tech It From Me is an independent and solo-produced podcast. 2.800000 6.200000 Welcome to the TechEd for me podcast, I'm Mike Madole. 6.200000 10.300000 Today, we're diving into one of the biggest tech stories of the year. 10.300000 21.000000 Mata, the company behind Facebook, Instagram, WhatsApp, and Threads, has just signed a 6-year 10 billion dollar deal with Google Cloud. 21.000000 26.500000 That's right, Mata, a company that already runs some of the largest data centers on the planet, 26.500000 30.500000 is handing billions of dollars to one of its fiercest rivals. 30.500000 38.500000 And they're doing it not for storage or email hosting, but specifically to power their artificial intelligence workloads. 38.500000 40.500000 Why would Mata make this move? 40.500000 45.500000 Why is Google Cloud suddenly winning big contracts from major AI players? 45.500000 52.500000 And what does this mean for the cloud wars between Amazon Web Services, Microsoft Azure, and Google? 52.500000 56.500000 This is the Tech It From Me podcast. Let's go. 56.500000 58.500000 This is the Tech It From Me podcast. 58.500000 60.500000 Let's start with the basics. 60.500000 71.500000 According to reporting from CNBC and the information, Mata has agreed to spend over 10 billion dollars with Google Cloud over the next six years. 71.500000 75.500000 The deal is focused on AI infrastructure. 75.500000 83.500000 We're talking about the heavy-duty compute needed to train large-scale AI models and run massive workloads. 83.500000 91.500000 Mata has historically leaned heavily on AWS, Amazon's Cloud, and also on Microsoft Azure. 91.500000 94.500000 But in this case, it turns to Google. 94.500000 98.500000 And this isn't just about renting some extra servers. 98.500000 103.500000 What Mata really gets out of this is access to Google's advanced hardware. 103.500000 108.500000 Particularly, Google's tensor processing units or TPUs. 108.500000 113.500000 These are custom chips designed specifically for AI. 113.500000 120.500000 So in short, Mata is essentially saying we're building some of the most ambitious AI systems in the world. 120.500000 128.500000 And we need every ounce of compute power we can get, even if it means paying our rivals to help us. 128.500000 137.500000 So let's talk about why Mata, a company that already owns gigantic data centers, would even bother outsourcing to Google. 137.500000 140.500000 Well, number one, scale. 140.500000 142.500000 AI workloads are enormous. 142.500000 150.500000 Training models like Lama 3 and the future, Lama 4, is like trying to power a small city. 150.500000 157.500000 Even though Mata has invested billions in its own infrastructure, it simply can't build capacity fast enough. 157.500000 161.500000 By renting from Google, it gets instant scale. 161.500000 164.500000 Number two is diversification. 164.500000 168.500000 Right now, Mata already uses Amazon and Microsoft. 168.500000 172.500000 Adding Google means Mata is spreading out its risk. 172.500000 181.500000 If one provider runs into capacity issues, supply chain shortages, or even political pressures, Mata still has options. 181.500000 186.500000 It's a hedge and it gives them leverage in negotiations as well. 186.500000 189.500000 Thirdly, Google's unique hardware. 189.500000 194.500000 Those TPUs I mentioned earlier, they're a big differentiator. 194.500000 199.500000 AWS and Azure are heavily reliant on Nvidia GPUs. 199.500000 204.500000 Google, on the other hand, has spent years building its own AI chips. 204.500000 207.500000 If you're a Mata, that's quite attractive. 207.500000 216.500000 It means potentially faster training times and less dependency on Nvidia's sometimes scarce supply of GPUs. 216.500000 221.500000 And finally, number four is speed over rivalry. 221.500000 227.500000 Let's not forget, Mata and Google are brutal competitors in the online advertising business. 227.500000 232.500000 They're fighting for the exact same dollars for marketers every single day. 232.500000 238.500000 But here's the thing, in the race for AI dominance, rivalry takes a backseat. 238.500000 247.500000 If using Google's chips gets Mata to market faster with new AI features in, say, Instagram, threads, or WhatsApp, 247.500000 251.500000 it's worth writing that $10 billion check. 251.500000 261.500000 So in short, Mata doesn't want to give money to Google, but it needs to in order to keep pace in the AI arms race. 261.500000 266.500000 So hopefully that all makes sense to you from Mata's side of the coin here. 266.500000 268.500000 But let's flip the perspective. 268.500000 270.500000 What does this mean for Google? 270.500000 274.500000 For Google Cloud, this is a monster win. 274.500000 278.500000 Historically, Google Cloud has been the number three player. 278.500000 281.500000 AWS is the undisputed leader. 281.500000 285.500000 Microsoft Azure is number two and closing the gap. 285.500000 289.500000 And Google has been fighting for a distant third place. 289.500000 296.500000 For years, the joke was that Google Cloud had great technology, but couldn't close big enterprise deals. 296.500000 301.500000 Well, that narrative just changed with this one deal. 301.500000 304.500000 First, let's look at the financials. 304.500000 309.500000 This deal adds about $1.6 billion per year in revenue. 309.500000 318.500000 In the last quarter, Google Cloud reported $13.6 billion in revenue and about $2.8 billion in operating income. 318.500000 325.500000 So Meta alone represents more than 10% of what Google Cloud makes in a quarter. 325.500000 327.500000 That's quite meaningful. 327.500000 330.500000 Secondly, enterprise credibility. 330.500000 338.500000 If Mata trusts Google Cloud with its AI workloads, that sends a signal to every other big enterprise out there. 338.500000 341.500000 Google Cloud is ready for prime time. 341.500000 352.500000 This isn't just startups or smaller customers. This is one of the largest tech companies in the world betting billions of dollars on Google. 352.500000 355.500000 Thirdly, there's definitely momentum. 355.500000 363.500000 Earlier this year, Google also secured business from OpenAI, which had been almost exclusively on Microsoft Azure. 363.500000 367.500000 That was a huge surprise throughout the industry. 367.500000 373.500000 Now, with Mata on board, that's two major AI players in less than one year. 373.500000 377.500000 And fourthly, validation of TPUs. 377.500000 381.500000 Google has been pouring money into its TPU program for years. 381.500000 384.500000 And people wondered, was it worth it? 384.500000 387.500000 Well, we may finally have the answer. 387.500000 396.500000 When companies like Mata are willing to write $10 billion checks to get access to TPUs, you know the investment is paying off. 396.500000 403.500000 For Google Cloud, this isn't just revenue. It's about proving that they're not just the third option. 403.500000 407.500000 They can actually lead in the one area that matters most right now. 407.500000 410.500000 That is artificial intelligence. 410.500000 417.500000 So with all this being said, let's zoom out for a second and just take a look at the cloud wars overall. 417.500000 419.500000 AWS is still the giant. 419.500000 425.500000 It was the first mover and it still dominates in terms of overall market share. 425.500000 431.500000 Enterprises trust AWS for reliability, scale and maturity. 431.500000 436.500000 But the fact that Mata hasn't gone all in with AWS tells us something. 436.500000 441.500000 No single cloud provider can meet the AI demand alone. 441.500000 446.500000 Microsoft Azure has been writing high thanks to its partnership with OpenAI. 446.500000 455.500000 Products like Microsoft's co-pilot and the integration of chat GPT into its ecosystem have been strong selling points. 455.500000 463.500000 But losing exclusivity with OpenAI earlier this year was a bit of a hit to its image. 463.500000 465.500000 And then there's Google Cloud. 465.500000 468.500000 For years, it's been struggling to catch up. 468.500000 473.500000 But now suddenly, it's positioned itself as the AI first cloud provider, 473.500000 480.500000 winning both OpenAI and Mata in the same year is a huge perception shift. 480.500000 482.500000 So here's the key. 482.500000 484.500000 The battleground has absolutely moved. 484.500000 491.500000 Ten years ago, the fight was about general purpose workloads, hosting apps, websites and databases. 491.500000 495.500000 Today, the fight is about AI-specific infrastructure. 495.500000 505.500000 Whoever can provide the best GPUs, TPUs and networking for AI workloads will dominate the next decade of cloud. 505.500000 509.500000 Now, let's not lose sight of the irony of this new deal. 509.500000 513.500000 Mata and Google are rivals, fierce rivals. 513.500000 517.500000 Together, they control the majority of the global digital ad market. 517.500000 521.500000 They compete every day for eyeballs and ad spend. 521.500000 526.500000 And yet, here they are as partners. 526.500000 533.500000 This is what we call "co-optition," competitors who collaborate when it benefits them. 533.500000 541.500000 It's not uncommon in the tech space, but this one feels especially striking given the particular rivalry. 541.500000 543.500000 Why does Mata do it? 543.500000 546.500000 Because the benefits outweigh the risks. 546.500000 554.500000 Getting access to Google's TPUs and scale is more important than the fact that they're giving money to a competitor. 554.500000 557.500000 And why does Google do it? 557.500000 559.500000 Because revenue is revenue. 559.500000 567.500000 And let's be honest, if Mata wants to fund your cloud division with $10 billion, you don't exactly say no. 567.500000 571.500000 This deal shows just how massive AI has become. 571.500000 580.500000 It's forcing even bitter rivals to work together, because the scale of the challenge is bigger than any one company. 580.500000 584.500000 Let's step back even further and look at the bigger picture here. 584.500000 594.500000 Mata has said it expects total expenses this year to be between $114 and $118 billion. 594.500000 599.500000 A massive chunk of that is going into AI infrastructure. 599.500000 609.500000 Google Cloud is growing at 32% year-over-year, outpacing Google's overall growth rate of about 14%. 609.500000 617.500000 Across the industry, companies are pouring money into GPUs, TPUs, data centers, and networking capacity. 617.500000 620.500000 In video, cat-make chips fast enough. 620.500000 626.500000 Energy grids are being strained by the sheer power needs of AI data centers. 626.500000 633.500000 It's becoming very clear, the AI boom is funding the next wave of cloud expansion. 633.500000 643.500000 In the 2010s, cloud grew thanks to the adoption of SaaS, things like Salesforce, Workday, or even Zoom. 643.500000 648.500000 In the 2020s, cloud growth will be fueled by AI workloads. 648.500000 657.500000 Whoever can deliver the best AI infrastructure, whether it's AWS, Azure, or Google, will win the next decade. 657.500000 661.500000 And it's not just about money, it's about innovation speed. 661.500000 670.500000 If Google can give Mata faster training cycles, that means Mata can roll out new AI-powered features sooner. 670.500000 675.500000 And that in turn affects billions of users around the world. 675.500000 683.500000 So, what's the bottom line? Mata's $10 billion deal with Google Cloud is a turning point. 683.500000 691.500000 For Mata, it's about scaling AI faster and not falling behind an erase against open AI, anthropic, and others. 691.500000 702.500000 For Google, it's about proving that it can compete head-to-head with AWS and Azure, and maybe even pull ahead in AI-specific workloads. 702.500000 710.500000 The irony of the partnership is hard to miss. Mata and Google are rivals and ads, but partners in AI. 710.500000 713.500000 But that's the reality of today's tech industry. 713.500000 720.500000 The scale of AI is so massive, it's reshaping alliances in unexpected ways. 720.500000 723.500000 If there's one takeaway here, it's this. 723.500000 727.500000 The cloud wars aren't just about hosting apps anymore. 727.500000 739.500000 They're about who can deliver the most powerful AI infrastructure, and right now with Mata's $10 billion bet, Google has just made a massive statement. 739.500000 743.500000 Thanks for tuning in to today's episode of Tech It From Me. 743.500000 752.500000 If you liked this episode, please consider sharing it, and if you haven't already, subscribe to the Tech It From Me podcast, wherever you get your podcast from. 752.500000 760.500000 Don't forget, you can read the full blog post on techitfromme.com for more details and analysis. 760.500000 763.500000 Thanks for listening, and until next time. 763.500000 767.500000 Tech It From Me is an independent and solo-produced podcast.