Google's AI Cost Advantage: Owning the Cloud
Google owns the cloud
AI is a scale game. Google ( GOOGL 0.00%↑ ) owns and operates a full AI stack. This provides Google with a structural cost advantage over OpenAI and Anthropic - both of which must rent cloud capacity from vendors such as Microsoft Azure, Amazon AWS and Oracle Cloud.
Google designs some of its own chips (TPUs), which is a source of cost savings.
Google owns and operates cloud infrastructure, which means it does not have to pay a rental mark-up for cloud capacity. This is in stark contrast to OpenAI and Anthropic, each of which must pay cloud vendors for use of cloud resources.
Google can use this structural cost advantage to subsidize its Gemini models.
Google could offer a more generous free tier than OpenAI or Anthropic ever could.
Google could offer different price points for different model offerings.
Google has any number of ways it could get creative with its Gemini go-to-market strategy given its structural cost advantage over OpenAI and Anthropic.
