Google says over half of generative AI startups use its cloud

When workers go away Google to affix the substitute intelligence startup race, the search large nonetheless has a method to profit — by holding these former staff as cloud prospects.

More than half of venture-backed generative AI startups pay for Google’s cloud computing platform, Alphabet Inc., Google’s mother or father firm, mentioned Tuesday. Of the startups valued at over $1 billion, 70% are Google Cloud prospects, and a few third of these are helmed by former workers, together with Anthropic, Character.ai and Cohere, the corporate mentioned. That provides Google a method to lengthen its affect within the discipline even when it sheds expertise.

Google’s cloud unit, which reported a revenue for the primary time this 12 months, has emerged as one of many firm’s finest bets for development as its core search enterprise matures. Google nonetheless trails Amazon.com Inc.’s AWS and Microsoft Corp.’s Azure available in the market. But startups within the discipline of generative AI — packages that may spin up photographs, textual content and video from easy prompts — are more and more turning to the corporate, mentioned James Lee, Google Cloud’s normal supervisor for startups and AI.

“We’re seeing strong momentum in our business, and we see Google Cloud as the preferred choice for startups building generative AI,” Lee mentioned in an interview.

Google Cloud prospects have the choice to make use of AI fashions from Google itself in addition to different firms, a level of flexibility that appeals to startups, Lee mentioned.

Alphabet Chief Executive Officer Sundar Pichai mentioned earlier this 12 months that by his rely, greater than 2,000 startups have been created by former workers, a few of which turn into prospects or finally boomerang again to Google. “I think it’s a healthy part of how the ecosystem works,” he mentioned.

Elemental Cognition CEO David Ferrucci says Google has additionally been within the AI house for thus lengthy, he trusts that the workforce will “talk a common language” when discussing his firm’s wants, he mentioned. Elemental makes use of Google Cloud completely.

Google decided the proportion of startups utilizing its platform by cross-referencing its record of cloud computing shoppers with analysis agency PitchBook’s record of generative AI startups which have raised cash from enterprise capital companies, accelerators, particular person buyers and different sources, an organization spokesperson mentioned. Google excluded prospects that didn’t meet a minimal degree of spending, although cloud computing credit that the corporate doles out to startups counted towards that threshold, the spokesperson mentioned. Some of the startups use different cloud suppliers as nicely, Lee mentioned.