Weekly Update: The key developments and insights for the week.

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Welcome to this week’s edition of our Cloud Technology Digest, where we will explore the most significant deployments in Cloud Computing together. This week, we will discuss regulatory actions, strategic partnerships, and technological advancements.

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1. US Federal Trade Commission Prepares to Investigate Microsoft Cloud Business.

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The US Federal Trade Commission (FTC) is preparing to investigate Microsoft’s cloud computing business for alleged anti-competitive practices. The investigation will focus on claims that Microsoft uses its market power in productivity software to hinder customers from moving data from its Azure cloud services to competitors. Potential tactics under scrutiny include increased subscription fees, high exit fees, and making Office 365 products incompatible with rival cloud platforms. This move aligns with Chair Lina Kahn’s efforts to curb monopolistic practices in Big Tech. (Financial Times, 14 Nov 2024)

If the investigation results prove Microsoft is engaging in these alleged practices, it could have significant implications for the cloud computing market. It may be the first step to a better world where these practices are just bad memories from the past.

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2.????? Google Cloud Partners with Konecta to Enhance AI-Powered Customer Experience. ?? Google Cloud and the Spanish multinational Konecta have announced a three-year partnership to improve customer experience using Artificial Intelligence (AI). Konecta plans to migrate 100.000 employees to Google Workspace and certify 500 engineers in Google Cloud Technologies. The integration of AI capabilities into Konecta’s services aims to automate customer interactions, deploy AI agents and offer more personalised experiences. According to Cinco Dias, the financial publication of the newspaper “El Pais” from Spain, this collaboration also includes implementing Google Cloud’s Customer Engagement Suite to enhance customer service operations. (Cinco Dias, 04 Nov 2024)

This partnership is excellent news for Spain’s race to become a highly technological state. It also highlights the growing trend of leveraging AI in customer success enhancement and can demonstrate the potential of cloud-based AI solutions in improving business operations. The effectiveness and results are yet to be seen, but it’s a promising start for this kind of development in the European Union.

3.????? Amazon Offers Free Computing Power to AI Researchers. Challenging Nvidia Amazon Web Services (AWS) has announced it will offer USD 110 million in free computing credits to AI researchers, challenging Nvidia’s dominance by promoting their custom AI chip, Trainium. This initiative includes participation from institutions like Carnegie Mellon University and UC Berkeley. AWS plans to make 40.000 Trainium chips available and aims to attract developers by releasing fundamental chip documentation, allowing direct programming, contrasting Nvidia’s Cuda software dependence. As AWS faces fierce competition from Microsoft’s cloud services, this strategy targets explicitly large customers who could potentially make significant performance gains by fine-tuning the use of many chips, thereby saving costs on large-scale infrastructure investments. (Reuters, 12 Nov 2024)

It was a great move from the Seattle Big Hyperscaler to join the Intel AMX train and shift AI GPU-based training to a more cost-effective CPU-based one. This can shortly impact graphic accelerator card prices and bring excellent news to the gaming industry.

4. Alibaba’s Cloud Division Shows Strong Performance Amid Mixed Quarterly Results. After the mixed fiscal second-quarter results were announced, Alibaba’s stock dropped over 3%. The company’s earnings surpassed expectations with an adjusted 15,06 yuan per American depositary share (ADS), compared to the estimated 14,82 yuan. However, revenues fell short, with sales amounting to 236,5 billion yuan (USD 32,7 billion), below the expected 239,5 billion yuan. Despite a solid 5% year-over-year increase in sales in local currency, adjusted earnings per ADS decreased by 4%. The cloud division emerged as a strong performer, showing accelerated growth, with AI-related revenues soaring at a triple-digit rate. Alibaba’s international retail sales also surged by 35%, contrasting with flat sales in its Chinese retail division. The company’s ambitious investment in AI infrastructure points towards a strategy focused on sustaining market leadership in cloud services. Alibaba’s stock, down by 6,5% in the week and 10% in November, reflects market reactions amid broader economic uncertainties and competitive pressures with China’s e-commerce ecosystem. (Investors Business Daily, 11 Nov 2024)

The Chinese competitor to US Hyperscalers may still carry Jack Ma’s baby for a long time. However, it is also facing intense competition in China and other markets from Huawei Cloud and the Tencent Group, casting some shadows over the future of the Chinese Giant.

5.????? Google Cloud’s AI-Driven Growth Bodes Well for Amazon and Microsoft Google-parent Alphabet experienced a significant boost in Google Cloud revenue, with a 35% surge in the July-September quarter, driven by its AI capabilities. This outpaced analyst forecasts and marked the fastest growth in eight quarters. Alphabet’s stocks increased by 5.5% following the announcement. The performance is favourable for significant cloud providers Microsoft and Amazon, indicating a growing market for AI-enhanced computing power. Despite GCP accounting for a smaller portion of Alphabet’s revenue than its competitors, it has demonstrated robust growth, bolstered by its Tensor Processing Units and AI-driven features. Alphabet continues to invest heavily in AI and its cloud infrastructure, integrating tools like the Generative AI chatbot Gemini, which offers various advanced services to customers. This strategic focus has translated into increased client spending and notable revenue growth in the cloud segment, with expectations of higher capital expenditures in the coming years. (Reuters, 30 Oct 2024)

This indicates that AI capabilities in cloud services are more than smoke and mirrors. We can expect an increase in the demand for these AI-driven services in the near and mid-future, with a strong emphasis on AI as a Service product. This is, in fact, good news for all the big techs that can provide this kind of service: “In this big ocean, there is plenty of fish for everyone.”

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Thanks for reading us, and stay tuned for more updates on cloud computing and technology.