Comment by manquer
3 hours ago
You can use your preexisting committed spends for GCP on Open AI, i.e. if an enterprise 10M/year contracted spends for first party GCP services, now they can also use that on OAI models hosted on GCP.
Meaning they can swap out compute/storage spends on GCP to LLM model spend or use left over budget ( which would go waste anyway ) and so on . Any OpenAI sales by GCP teams would be considered against their quota typically in this type of arrangement [2]
This is normally not done to third party[1] marketplace services, Azure already does this for OpenAI, it helps drive some enterprise spends as it is from for fungible budgets or different approving authority internally in a org when it is not a new vendor, new budget etc.
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[1] It is not too hard to get into these types of programs i.e. it not only for OpenAI level partners mid sized startups can also be part of these deals in marketplace, the requirement usually is minimum size and the partner having to prove/show that are spending that customer's revenue on the compute etc so money is going back to them, then AWS/Azure/GCP will consider an org for this type of program.
Given that GCP is hosting these models on their cloud and therefore OpenAI is spending a % of every dollar back on GCP for every token sold like this; it wouldn't have been too hard for OpenAI to got such a program even if they were a mid sized startup.
[2] Multiples maybe involved (also used to push some first party products) 1x would 1M in OAI sales counts as 1M in their Qtr/annual targets 0.5x would mean 500k and 5x means 5M quota would be retired for 1M in sales etc.
So when cloud deals are signed, it is with a spending figure? Do you get discounts if it is a large number?
Thanks for you reply, it was very enlightening
The way they work, you get a preferred price for various services at a substantial discount to list rate, but you commit to a guaranteed spend level for that period. The guaranteed spend is typically account-wide, but you have to pay a true-up at the end of the period if you fail to hit it.
It's a bit of calculus: will your growth increase enough such that, especially with the discount, you'll reach the minimum?
You can see these agreements littering 10-Qs, or similar, like when Snapchat filed their S-1 and revealed:
>When Snap originally filed for its IPO in 2017, it revealed a massive $2 billion commitment over five years ($400 million annually) with Google Cloud.
Yes; larger discounts with more commits, you also get some price guarantees on SKUs quite valuable these days and other benefits - like say premium support, architecture guidance, access to product teams and so forth.
Self-service retail buyers of cloud have access to some of these price advantages as well, 1-3 Year reservations(even paid monthly) are 40% cheaper of the bat after all. PAYG with fluctuating usage is quite more expensive than committed consumption for cloud.