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Google Cloud and cybersecurity giant Palo Alto Networks have expanded their partnership, which is said to be the largest security services contract in Google cloud unit’s history.
Citing a source with direct knowledge of the matter, news agency Reuters reported that the deal involves a commitment from Palo Alto Networks to pay a sum “approaching $10 billion” to Google Cloud over several years. While some of the spending will go into migrating Palo Alto's existing offerings to Google's platform, a larger chunk will go into adding new services that involve artificial intelligence, Palo Alto president BJ Jenkins told the news agency.“AI has spawned a tremendous amount of demand for security,” Matt Renner, chief revenue officer for Google Cloud, was quoted as saying. Jenkins highlighted the need of security by saying that AI is creating “new security threats that no one had ever imagined.”
Why Google Cloud’s new deal may be a ‘problem’ for Amazon and Microsoft
Amazon and Microsoft currently hold larger market shares: roughly 30% and 20% respectively. Google Cloud, however, is growing at a fast rate. Recent third-quarter earnings show Google Cloud’s revenue surged 34% year-over-year, outpacing Microsoft (28%) and AWS (20%).
Google has taken the advantage of its own silicon (TPUs) and frontier models (Gemini), offering a “one-stop shop” for AI infrastructure that is proving to be advantageous to high-growth tech firms. Moreover, Google has started to offer its in-house TPU chip business directly to customers, including major AI labs like Anthropic, OpenAI and even Apple. Recently, a report that Meta is working on a deal with Google for its TPUs to train its AI models wiped nearly $250 billion from Nvidia’s market cap.By securing a $10 billion commitment from the world’s leading cybersecurity firm, Google is selling storage as well as embedding security into its infrastructure, likely providing another reason for companies to choose Google over its competitors.
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