OpenAI Partners with Google in Major Deal Amid Intense AI Competition

OpenAI has formed a surprising partnership with Google to utilize its cloud services, aiming to diversify its computing resources amid increasing competition between its ChatGPT and Google’s Gemini. Finalized in May after months of discussions, this collaboration enables OpenAI to lessen its dependence on Microsoft, which previously supported its computing needs through Azure. This strategic move comes as OpenAI faces growing demands for computing power since the launch of ChatGPT in late 2022. The partnership is particularly beneficial for Google’s cloud unit, especially as ChatGPT poses a significant threat to Google’s search business. Following the announcement, Alphabet’s stock rose 2.1%, while Microsoft shares fell 0.6%. Analysts acknowledged the collaboration as a major win for Google Cloud, although they cautioned about the escalating competitive pressure from ChatGPT. OpenAI is also working on enhancing its infrastructure through partnerships and the development of its in-house chip by 2025.

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