The Busy Brains
1 Jun 2023
Google has secured a significant cloud contract with Runway, an AI startup specializing in generative technology. The multi-million-dollar deal will provide Runway with extensive cloud services and credits, bolstering its transformative image and video capabilities. This partnership highlights the growing trend of cloud companies investing in AI startups and offering substantial cloud credits to fuel innovation.
Google has entered into a major contract with Runway, a prominent generative AI startup, granting the company access to millions of dollars in cloud services and related credits. Backed by investors such as Amplify Partners and Lux Capital, Runway's groundbreaking technology empowers users to enhance images and videos with text, leaving a lasting impact. Its innovative solutions have even been utilized in renowned films like "Everything Everywhere All At Once." Notably, Runway recently raised $100 million in funding at an impressive $1.5 billion valuation, with a leading cloud provider, as reported by Insider. Google itself participated in this funding round, according to The Information.
The internal documents obtained by Insider reveal that Google's cloud contract with Runway is valued at $75 million over a span of three years. The contract was executed on April 28 and is set to take effect on August 30. Additionally, Runway possesses approximately $20 million in credits, with a specific request to allocate up to $270,000 for support fees, as indicated in the documents.
While Google declined to comment, Runway has not yet responded to requests for comment. Google Cloud operates a startups program that offers customers up to $200,000 in cloud credits over two years, accompanied by technical guidance, mentorship, sales support, and expert connections. The contract between Google and Runway grants the AI startup significantly more credits than the standard tiers of the program, fostering innovation and growth.
In recent years, there has been a notable trend of major cloud companies investing in AI startups and providing cloud credits as part of these partnerships. Microsoft's billion-dollar investment in OpenAI in 2019, for instance, included cash and credits for its Azure cloud service. While such deals have raised accounting concerns related to revenue round-tripping, they highlight the significance of cloud services in fueling AI innovation.
Cloud giants like Google Cloud, Amazon Web Services (AWS), and Microsoft have long-running startup programs that offer complimentary cloud credits. The underlying concept is that as startups scale and expand, their cloud service consumption will increase, ultimately leading to paid subscriptions.
Among these cloud providers, AWS has emerged as a frontrunner in supporting startups. Established since 2008, Airbnb has relied on AWS for its cloud needs, and in 2020, it signed a remarkable multiyear deal worth $1.2 billion. Similarly, Pinterest secured a substantial $750 million agreement with AWS in 2017, prior to its public listing.
Previously, Google Cloud sales representatives expressed concerns about their ability to match AWS's offer of free cloud credits to startups. However, with the recent contract with Runway, Google is making significant strides in supporting and nurturing emerging AI companies, solidifying its position in the evolving landscape of cloud and AI integration.