Google Cloud customers have the option to use AI models from Google itself as well as other companies, a degree of flexibility that appeals to startups, Lee said. (REUTERS)

More Than Half of Generative AI Companies Rely on Google Cloud Platform

Adriana MaraisAugust 30, 23 Google, Google Cloud

Google can still reap the benefits of employees who leave to join the artificial intelligence startup competition by retaining them as cloud customers.

More than half of venture-backed generative AI companies pay for Google’s cloud computing platform, Alphabet Inc., Google’s parent company, said Tuesday. Seventy percent of startups valued at more than $1 billion are Google Cloud customers, and about a third are led by former employees, including Anthropic, Character.ai and Cohere, the company said. This gives Google a way to expand its influence in the industry, even as it tempers talent.

Google’s cloud unit, which reported a profit for the first time this year, has emerged as one of the company’s top growth opportunities as its core search business matures. Google continues to trail Amazon.com Inc.’s AWS and Microsoft Corp.’s Azure in the market. But startups in the field of generative AI — programs that can create images, text and video from simple prompts — are increasingly turning to the company, said James Lee, Google Cloud’s general manager of startups and artificial intelligence.

“We see strong momentum in our business, and we see Google Cloud as the first choice for startups building generative AI,” Lee said in an interview.

Google Cloud customers have access to AI models from Google itself and from other companies, a flexibility that attracts startups, Lee said.

Alphabet CEO Sundar Pichai said earlier this year that by his count, former employees have created more than 2,000 startups, some of which become customers or eventually boomerang back to Google. “I think it’s a healthy part of how the ecosystem works,” he said.

David Ferrucci, CEO of Elemental Cognition, says Google has also been in the AI space for so long that he trusts the team to “speak a common language” when discussing his company’s needs, he said. Elemental uses Google Cloud exclusively.

Google determined the proportion of startups using its platform by comparing its list of cloud computing customers to research firm PitchBook’s list of generative AI companies that have raised money from venture capitalists, accelerators, individual investors and other sources, a company spokeswoman said. Google excluded customers who didn’t meet the minimum spending level, although the company’s cloud computing credits to startups counted toward that threshold, the spokeswoman said. Some of the startups also use other cloud providers, Lee said.