Microsoft's Major AI Cloud Computing Client: TikTok's Impact on the Industry

Home AI News Microsoft's Major AI Cloud Computing Client: TikTok's Impact on the Industry

Updated on November 11 2024

TikTok has reportedly been paying Microsoft nearly $20 million per month to access OpenAI’s models, constituting almost a quarter of the revenue from Microsoft’s cloud division. According to sources, Microsoft’s cloud AI business is on track to reach $1 billion in annual revenue. However, if TikTok develops its own large language model (LLM), its reliance on these capabilities may decrease.

Last year, it was reported that TikTok's parent company, ByteDance, was "secretly using" OpenAI technology to create its own LLM. This action is typically regarded as unorthodox in the AI industry and violates OpenAI’s terms of service, which prohibit using model outputs to develop competing AI models. Microsoft, while providing ByteDance access to OpenAI, enforces the same policy.

In response to these concerns, OpenAI suspended ByteDance’s account to investigate a potential violation of its developer license. ByteDance claimed it was using the technology "to a very limited extent" for its model development.

Additionally, Microsoft has made a significant investment in OpenAI, becoming its exclusive cloud provider and spending hundreds of millions on a supercomputer to support ChatGPT. In its Q4 2024 earnings report, Microsoft announced a 29 percent growth in Azure revenue, slightly below its projected range of 30 to 31 percent. CFO Amy Hood indicated that for Q1 2025, Microsoft expects Azure revenue growth of 28–29 percent.

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