In a bid to stay ahead of the competition, cloud providers are aggressively courting AI startups, and the latest deal is no exception. Fei-Fei Li’s World Labs has tapped Google Cloud as its primary compute provider to train AI models, a deal that could be worth hundreds of millions of dollars.
A Lucrative Market for Cloud Providers
The competition for cloud services among large tech companies like Microsoft, Amazon Web Services (AWS), and Google Cloud is heating up. These companies are willing to invest heavily in building relationships with well-funded AI startups, which have significant compute needs. In fact, some of the largest deals include OpenAI, which exclusively trains and runs AI models on Microsoft Azure, and Anthropic, which uses AWS and Google Cloud.
The Value of AI Startups for Cloud Providers
These companies regularly pay millions of dollars for computing services, and could one day need even more as their AI models scale. This makes them valuable customers for cloud providers to build relationships with early on. World Labs is certainly building unique, multimodal AI models with significant compute needs.
World Labs’ Deal with Google Cloud
During the Google Cloud Startup Summit on Tuesday, the companies announced that World Labs will use a large chunk of its funding to license GPU servers on the Google Cloud Platform. Ultimately, this will allow the startup to train ‘spatially intelligent’ AI models.
Fei-Fei Li’s Ties with Google Cloud
Li has deep ties with Google Cloud, having led the company’s AI efforts in 2018. However, Google denies that this deal is a product of that relationship. Instead, General manager of startups and AI at Google Cloud, James Lee, tells TechCrunch that World Labs’ AI models will one day be able to process, generate, and interact with video and geospatial data.
The Importance of Compute Needs
World Labs justraised $230 millionat more than a billion-dollar valuation, a deal led by A16Z. The startup is building AI world models that require significant compute resources. Lee said services like High Performance Toolkit to scale AI workloads, and deep supply of AI chips were a larger factor in the decision.
Google Cloud’s AI Chips vs. Nvidia GPUs
Google Cloud offers AI startups a choice between its proprietary AI chips, tensor processing units (TPUs), and Nvidia’s GPUs, which Google purchases and has a more limited supply of. Google Cloud is trying to get more startups to train AI models on TPUs, largely as a means to reduce its dependency on Nvidia. All cloud providers are limited today by the scarcity of Nvidia GPUs, so many are building their own AI chips to meet demand.
Why World Labs Chose GPUs
World Labs chose to use Nvidia GPUs for their compute needs. Lee said that the decision was based on the specific requirements of their AI models and the need for flexible and scalable solutions.
A Volatile Market for Cloud Providers
The cloud computing market is highly competitive, with large tech companies like Microsoft, AWS, and Google Cloud vying for market share. The deals between these companies and AI startups are a key part of this competition.
Conclusion
The deal between World Labs and Google Cloud highlights the importance of compute resources in AI development. As the demand for cloud services continues to grow, cloud providers will need to invest heavily in building relationships with well-funded AI startups and meeting their significant compute needs.
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