It isn’t your imagination; Google Cloud is flooding the zone

These gigantic deals might seem threatening for Google, given the partnerships that companies like OpenAI and Nvidia appear to be cementing elsewhere. In fact, it looks a lot like Google is being cut out of some frenzied dealmaking.

But the corporate behemoth isn’t exactly sitting on its hands. Instead, Google Cloud is signing smaller companies like Loveable and Windsurf — what deSouza calls the “next generation of companies coming up”– as “primary computing partners” without major upfront investments.

The approach reflects both opportunity and necessity. In a market where companies can go “from being a startup to being a multi-billion dollar company in a very short period of time,” as deSouza puts it, capturing future unicorns before they mature could prove more valuable than fighting over today’s giants.

The strategy extends beyond simple customer acquisition. Google offers AI startups $350,000 in cloud credits, access to its technical teams, and go-to-market support through its marketplace. Google Cloud also provides what deSouza describes as a “no compromise” AI stack – from chips to models to applications – with an “open ethos” that gives customers choice at every layer.

“Companies love the fact that they can get access to our AI stack, they can get access to our teams to understand where our technologies are going,” deSouza said during our interview. “They also love that they’re getting access to enterprise grade Google class infrastructure.”

This infrastructure advantage became more apparent this month when reporting revealed Google’s behind-the-scenes maneuvering to expand its custom AI chip business. According to The Information, Google has struck deals to place its tensor processing units (TPUs) in other cloud providers’ data centers for the first time, including an agreement with London-based Fluidstack that includes up to $3.2 billion in financial backing for a New York facility.

Competing directly with AI companies while simultaneously providing them infrastructure requires finesse. Google Cloud provides TPU chips to OpenAI and hosts Anthropic’s Claude model through its Vertex AI platform, even as its own Gemini models compete head-to-head with both. (Google Cloud’s parent company, Alphabet, also owns a 14% stake in Anthropic, per New York Times court documents obtained earlier this year, though when asked directly about Google’s financial relationship with Anthropic, deSouza calls the relationship a “multi-layered partnership” then quickly redirected to Google Cloud’s “model garden” – noting that customers can access various foundation models.)

But if Google is trying to be Switzerland while advancing its own agenda, it has had plenty of practice. The approach has roots in Google’s open-source contributions, from Kubernetes to the foundational “Attention is All You Need” paper that enabled the transformer architecture underlying most modern AI. More recently, Google published an open-source protocol called Agent-to-Agent (A2A) for inter-agent communication in an attempt to demonstrate its continued commitment to openness even in competitive areas.

“We have made the explicit choice over the years to be open at every layer of the stack, and we know that this means companies can absolutely take our technology and use it to build a competitor at the next layer,” deSouza acknowledged. “That’s been happening for decades. That’s something we are okay with.”

Google Cloud’s courtship of startups comes at a particularly interesting moment. Just this month, federal judge Amit Mehta delivered a nuanced ruling in the government’s five-year-old search monopoly case, attempting to curb Google’s dominance without hampering its AI ambitions.

While Google avoided the Justice Department’s most severe proposed penalties, including the forced divestment of its Chrome browser, the ruling underscored regulatory concerns about the company leveraging its search monopoly to dominate AI. Critics are worried, understandably, that Google’s vast trove of search data provides an unfair advantage in developing AI systems, and that the company could deploy the same monopolistic tactics that secured its search dominance.

In conversation, deSouza is focused on far more positive outcomes. For example, he says, “I think we have an opportunity to fundamentally understand some of the major diseases that today we just don’t have a good understanding of,” deSouza said, outlining a vision where Google Cloud helps power research into Alzheimer’s, Parkinson’s, and climate technologies. “We want to work very hard to make sure that we are pioneering the technologies that will enable that work.”

Critics may not easily be assuaged. By positioning itself as an open platform that empowers rather than controls the next generation of AI companies, Google Cloud may be showing regulators that it fosters competition rather than stifles it, all while forging relationships with startups that might help Google’s case if regulators ramp up pressure.

For our full conversation with deSouza, check out this week’s StrictlyVC Download podcast; a new episode comes out every Tuesday.