In today's Cloud Wars Minute, I take a closer look at what may be the biggest B2B deal in tech history, Larry Ellison’s $100B+ agreement with OpenAI.

Highlights

00:15 — We've seen some extraordinary things happen with OpenAI and the alliances it has had. For the first several years of its existence, it was tightly paired with Microsoft. That has changed dramatically now, and OpenAI is now tightly entwined with Oracle.

02:01 — What Oracle said in a document it filed was that it has a cloud services contract that will pay it more than $30 billion annually, starting in fiscal 2028. I doubt that Sam Altman at OpenAI wants to go out every year and shop around for new cloud infrastructure providers. So, I think it's reasonable to expect this is going to last two years, three years, perhaps more.

02:39 — So now, OpenAI, aligned with Oracle, could have picked anybody. What happened to the Microsoft and OpenAI bromance? Going back to 2019, Microsoft invested $1 billion into OpenAI. In 2021, it followed up with more, and in 2023, at the beginning of the year, the companies each put out announcements saying: We have entered into a deeper, longer-term, incredibly strategic, two-way technology transfer.

03:38 — And suddenly we see this change. In just two short years after this big announcement by both of them, we see, in the White House, the first day of President Trump's second term, who shows up but Larry Ellison, Masayoshi Son, the CEO of SoftBank, and Sam Altman, the CEO of OpenAI, to announce a $500 billion initiative called Project Stargate.

04:22 — You could have looked at this and said: Microsoft is the biggest tech company in the world. It's the biggest cloud company. It has the most money. It has all these advantages. They'll never let OpenAI slip away. But they did, or was it not so much that Microsoft let it slip away as Larry Ellison said, Hey, I have a better approach. I have a better way here.

05:02 — But these shifts we're seeing — where new types of business are done in different ways, with different combinations and partnerships — are challenging the status quo. All these companies have to continue to do new and better things in new and better ways that drive more value and better business outcomes for customers.

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