00:00Meta has quietly become one of Microsoft's largest AI customers, spending hundreds of millions of dollars a year to access
00:07the Azure cloud service.
00:09As Meta consumes trillions of tokens via the platform, circular business dealings remain a concern.
00:15Bloomberg's Brody Ford broke this story. It's one of the most read all across different Bloomberg platforms.
00:20I heard that right. Meta is one of Microsoft's biggest customers. Explain.
00:26Yeah, it's kind of funny, right? I mean, it's this circular business dealings, as you said.
00:32For AI to really have the ROI that it's hyped up to be, it needs to be used by companies
00:38across the economy and disseminate broadly.
00:41But this is another data point that usage and revenue remains concentrated in that kind of small pool of call
00:49it 10 or 20 big software, digital native AI type companies.
00:56We say that Meta is not a hyperscaler. It operates its own data centers at hyperscale.
01:02Could you go into some of the sort of technical specifics of what Meta pays Microsoft for?
01:07Like, is this capacity, software suites? Like, what are they actually doing?
01:11As far as we can tell, it's just coding assistance. I mean, I think that's the bulk of it, right?
01:17It's just that a lot of companies that code a lot use a lot of tokens in that process.
01:22But I think it's particularly interesting that, you know, some of our colleagues had a story that Meta has been
01:27exploring spinning up its own API business, right?
01:30And it makes sense when you see that, you know, hundreds of millions of dollars are going out the door
01:36to companies like Microsoft.
01:37And maybe it makes sense for Meta to bring that in-house, cut down vendor spend and monetize it in
01:43the process.
01:44So it's very interesting to see how the AI era has forged new alliances and competition between companies.
01:51Brody, your reporting is based on a Bloomberg source.
01:55What have the companies officially said in response to the report?
01:58And what have they said generally about the topic?
02:00In response to the report, nothing.
02:03They declined to comment.
02:05More generally, Microsoft has touted 100,000 customers of Foundry.
02:10They talk about old school companies like Levi's being flagship customers.
02:15But, of course, this report shows that the most important companies are other tech companies, right?
02:22TikTok, Adobe, OpenAI, right?
02:26Their AI business for now remains a tech whale business.
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