AI Cloud Computing Business is like the Chemical Industry

The AI cloud computing industry is more like the chemical industry than you think, when it comes to supply agreements.

Meta is reportedly close to a deal that would have it renting $10 billion of compute, over two years, to Anthropic. Meta competes head to head with Anthropic for enterprise AI customers, and it might become its landlord.

Zuckerberg said back in May he was looking at getting into the cloud business, to prove Meta’s AI infrastructure spend can pay off beyond improving its own products. This is what that looks like in practice: you sell capacity to whoever needs it, competitor or not. Anthropic already pays SpaceX over a billion dollars a month for GPU time in its Colossus data center.

Compute has gotten expensive enough that “who’s your competitor” and “who’s your vendor” are becoming the same question.

Nothing’s signed and it could still fall apart. But the fact that these two are even talking tells you where the bottleneck in this industry sits right now. It’s the compute.

I still think Elon is on the right track with orbital compute (i.e. data centers in low altitude orbit).