TikTok is one of Microsoft’s biggest AI cloud computing customers

TikTok is one of Microsoft’s biggest AI cloud computing customers

2024-08-01 00:25:10

TikTok is apparently spending a lot on AI.

/

TikTok was paying Microsoft almost $20 million per month to access OpenAI’s models as of March, according to The Information.

By Emma Roth, a news writer who covers the streaming wars, consumer tech, crypto, social media, and much more. Previously, she was a writer and editor at MUO.

A TikTok logo surrounded by jazzy lines and colorful accents

Illustration by Nick Barclay / The Verge

A source told The Information that TikTok was paying Microsoft almost $20 million per month to access OpenAI’s models as of March, making up nearly a quarter of the revenue generated by its increasingly lucrative cloud division.

Microsoft’s cloud AI business was on track to earn $1 billion in annual revenue, according to The Information, but the report notes that TikTok may not need these capabilities this heavily if it develops its own large language model (LLM).

Last year, my colleague Alex Heath reported that TikTok’s parent company, ByteDance, was “secretly using” OpenAI’s technology to create an LLM of its own:

This practice is generally considered a faux pas in the AI world. It’s also in direct violation of OpenAI’s terms of service, which state that its model output can’t be used “to develop any artificial intelligence models that compete with our products and services.” Microsoft, which ByteDance is buying its OpenAI access through, has the same policy.

Following that report, OpenAI suspended ByteDance’s account to investigate a potential violation of its developer license. At the time, ByteDance told CNN it was using the technology “to a very limited extent” to help create its own models.

Microsoft also has a multibillion-dollar investment deal making it OpenAI’s exclusive cloud provider and has spent “several hundreds of millions of dollars” building a supercomputer to power ChatGPT. In its Q4 2024 earnings report released Tuesday, Microsoft revealed Azure revenue growth of 29 percent, just missing the 30 to 31 percent its last earnings release projected. CFO Amy Hood said that in Q1 2025, Microsoft anticipates around 28–29 percent Azure revenue growth.