Meta Platforms Inc. has quietly become one of Microsoft Corp.'s largest AI customers, spending hundreds of millions of dollars annually to process trillions of tokens weekly on Azure. This highlights how AI demand remains concentrated among tech giants like ByteDance, Adobe, and Perplexity. While Microsoft's Azure OpenAI service approaches a $10 billion annual run rate, the concentration of revenue among industry peers raises concerns about circular business dealings and the need for broader economic adoption.
Meta Azure AI spending
- ▪Meta Platforms Inc. has become one of Microsoft Corp.'s largest AI customers, spending hundreds of millions of dollars a year to access artificial intelligence models through Microsoft's Azure cloud service.
- ▪Meta Platforms Inc. uses trillions of tokens of AI computing each week through Microsoft's Azure cloud platform.
Microsoft Azure OpenAI customers
- ▪TikTok's parent company ByteDance, Adobe, and AI search startup Perplexity have become significant customers of Microsoft's Azure OpenAI service.
- ▪Adobe and Meta Platforms Inc. both crossed the $1 million monthly spending threshold on Azure OpenAI services as of September 2024.
- ▪ByteDance was previously the single largest spender on Azure OpenAI services, shelling out nearly $20 million per month as of 2024, which accounted for roughly 25% of the platform's total revenue.
Azure AI revenue growth
- ▪OpenAI accounted for 70% of Microsoft's overall AI revenue in its most recent fiscal year.
- ▪Microsoft's Azure OpenAI business is on track to hit a $10 billion annual run rate, making it the fastest-growing segment of Microsoft's entire cloud operation.
Perplexity Microsoft partnership deal
- ▪Perplexity signed a $750 million, three-year deal with Microsoft Azure to access AI models from OpenAI, Anthropic, and xAI through a single cloud platform.
- ▪Perplexity has integrated its AI orchestration tools directly into Microsoft Teams and Microsoft 365, tying its services into Microsoft Foundry.
Meta competing AI services
- ▪Meta Platforms Inc. has released open-weight AI models that allow developers to download, modify, and run them independently rather than accessing them exclusively through Meta's services.
- ▪Meta Platforms Inc. plans to sell access to various AI models through an API service that could compete directly with Microsoft Foundry.
Circular AI revenue concerns
- ▪The concentration of Microsoft's AI revenue among major tech companies like Meta, ByteDance, and Adobe has revived industry concerns regarding circular business dealings and the lack of broader economic adoption.
- ▪Microsoft simultaneously acts as a major investor in OpenAI, a host of OpenAI models, and a direct competitor to several of its own Azure AI customers, including Adobe, Perplexity, and TikTok.
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