AI Wars at AWS, Azure, Google, More Attract FTC Scrutiny
The agency is looking at the myriad deals among AI developers and cloud providers. Plus, more on Broadcom post-VMware, AWS growth and other news.
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The hyperscalers face more government scrutiny as the AI wars intensify.
On Jan. 25, the head of the Federal Trade Commission, Lina Khan, said the agency will start looking into the agreements and investments among AI developers and cloud providers. The FTC wants to understand whether deals among the public cloud providers — AWS, Azure, Google Cloud and others — have any impact on the “competition across layers of the AI stack,” Khan said, according to FedScoop.
Khan said the FTC will examine how “business models drive incentives,” again, per FedScoop, and craft remedies around its findings, all in the interest of establishing “bright line rules on the development use and management of AI inputs.”
The FTC already has sent so-called compulsory information requests to Alphabet, the owner of Google Cloud; Amazon, the company behind Amazon Web Services; Anthropic, the company founded by people who played a role in the development of OpenAI, and which partnered with AWS last September; Microsoft, which owns Azure; and OpenAI, the maker of chatGPT in which Microsoft has a financial stake. They have 45 days to respond.
Microsoft and Google both told Reuters they’re cooperating with the FTC. The other providers so far aren’t commenting.
As Broadcom continues to anger VMware partners and end users with its approach to the $61 billion acquisition, it’s making its investors very happy.
This week, Broadcom stock hit a new, all-time high. The price reached $1,284, fueled by shareholder enthusiasm for Broadcom’s VMware strategy as well as its growth prospects in AI. While analysts and partners alike view Broadcom’s treatment of VMware with skepticism around long-term viability, Broadcom does seem to be delivering the short-term returns Wall Street demands.
For its 2024 fiscal year, Broadcom expects total revenue of about $50 billion, with $12 billion of that coming from VMware (minus the end-user computing and Carbon Black units).
To achieve this, Broadcom is taking the top 2,000 VMware customers away from channel partners and putting them into the hands of its direct sales teams. It’s also cutting partners who bring in less than $500,000 per year in VMware revenue. The company further has axed all perpetual licenses, on which more than 60% of VMware users rely, and instituted subscription requirements.
The disruption is prompting channel partners and end users alike to seek out VMware alternatives.
Meantime, Broadcom is pursuing more AI capabilities through VMware, which has teamed with Intel and Red Hat, and via its semiconductor divisions.
Altogether, the activity has propelled the company’s stock to new heights, while incurring plenty of controversy.
AWS is busy building new data centers and expanding its partner competencies.
First up, the world’s largest public cloud computing provider said on Jan. 25 that it’s about to make the largest capital investment Mississippi has ever seen. To that point, AWS will pay $10 billion to build two new data centers in the Magnolia State, creating at least 1,000 new jobs.
This isn’t AWS’ first rodeo in Mississippi, though this does mark its largest financial investment in the state to date. The timing likely comes as a relief to lawmakers and citizens — U.S. Census Bureau stats show that Mississippi struggles with a poverty rate of 19%.
On a similar note, AWS also has agreed to put $15 billion into expand its cloud computing infrastructure in Japan. AWS already runs two data center regions in the country.
Finally, AWS this week debuted its Small and Medium Business certification for partners. The hyperscaler has, in the past, paid less attention to this market than its competitors. However, that has been changing and the new competency reflects that. As with all AWS competencies, partners serving SMBs must undergo a rigorous validation process. Some of the companies validated for the launch of the certification include AllCloud, RapidScale, Mission Cloud Services and nClouds.
We round out this week’s cloud computing news roundup with a look at two more partnerships between hyperscalers and AI companies (perhaps giving the FTC more fuel for its inquiries?).
On Jan. 25, Google Cloud and Hugging Face, and Microsoft and Eviden, both announced AI-related deals.
Hugging Face, a developer of AI tools, will work with Google across open science, open source, cloud and hardware “to enable companies to build their own AI with the latest open models from Hugging Face and the latest cloud and hardware features from Google Cloud,” the company wrote in a blog.
The French-American company promised “new experiences for Google Cloud customers to easily train and deploy Hugging Face models within Google Kubernetes Engine and Vertex AI. Customers will benefit from the unique hardware capabilities available in Google Cloud, like TPU instances, A3 VMs, powered by NVIDIA H100 Tensor Core GPUs, and C3 VMs, powered by Intel Sapphire Rapid CPUs.”
On a similar note, Eviden, part of the Atos Group, is expanding its partnership with Microsoft. The companies have a mutual goal of driving $2.8 billion more in cloud services revenue for Eviden over the next five years.
To do that, they’ll work together on solutions around data and AI, Microsoft Copilot, and cloud transformation. Eviden further has committed to helping its thousands of employees earn more than 16,000 more Microsoft certifications throughout the agreement’s duration.
We round out this week’s cloud computing news roundup with a look at two more partnerships between hyperscalers and AI companies (perhaps giving the FTC more fuel for its inquiries?).
On Jan. 25, Google Cloud and Hugging Face, and Microsoft and Eviden, both announced AI-related deals.
Hugging Face, a developer of AI tools, will work with Google across open science, open source, cloud and hardware “to enable companies to build their own AI with the latest open models from Hugging Face and the latest cloud and hardware features from Google Cloud,” the company wrote in a blog.
The French-American company promised “new experiences for Google Cloud customers to easily train and deploy Hugging Face models within Google Kubernetes Engine and Vertex AI. Customers will benefit from the unique hardware capabilities available in Google Cloud, like TPU instances, A3 VMs, powered by NVIDIA H100 Tensor Core GPUs, and C3 VMs, powered by Intel Sapphire Rapid CPUs.”
On a similar note, Eviden, part of the Atos Group, is expanding its partnership with Microsoft. The companies have a mutual goal of driving $2.8 billion more in cloud services revenue for Eviden over the next five years.
To do that, they’ll work together on solutions around data and AI, Microsoft Copilot, and cloud transformation. Eviden further has committed to helping its thousands of employees earn more than 16,000 more Microsoft certifications throughout the agreement’s duration.
The AI wars among cloud providers are intensifying, and the U.S. Federal Trade Commission has the companies in its sights.
This week, the agency said it’s investigating whether the myriad deals among AI developers and cloud computing vendors are inhibiting competition. The FTC’s announcement comes a year after the AI wars started in earnest, and changed the course of 2023 for the tech sector and indirect channel alike.
There’s more happening in cloud than just AI, though — but we do say that with the caveat that most of the developments we’re reporting in this new cloud roundup pertain to the endless AI wars. That said, Broadcom, post-VMware acquisition, has hit its highest stock price yet, partly due to its potential in AI. And Hugging Face and Google Cloud have a new deal in place around, what else, AI.
From there, we take a look at Amazon Web Services’ growth plans in the United States and Japan, and Eviden’s latest strategy with Microsoft around cloud growth.
Click the image above to start with the latest from the FTC on the AI wars.
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