NEW YORK: Alphabet Inc and Blackstone Inc’s new cloud venture has hit delays for major data centre locations that were supposed to run Google’s chips, underscoring the obstacles standing in the way of Big Tech’s artificial intelligence (AI) ambitions.
The startup, known internally as “Project Braid”, was launched with US$5bil from Blackstone and aims to rent Google AI processors to customers in 2027.
The business joins a growing number of neoclouds, entities that lease chips and computing capacity.
The venture faced an early snag when Alphabet’s Google scrapped a plan for upstart data centre developer Crusoe to build sites in Cheyenne, Wyoming, according to people familiar with the matter, who asked not to be identified discussing confidential details.
Google took over the project and is reapplying for permits after losing confidence in Crusoe’s ability to deliver, the people said. Local officials told residents the project would be scaled down.
Another site was unsuitable because it wasn’t stocked with the right transformers, one of the people said.
Data-centre builders are facing shortages of such equipment, with wait times of almost a year, according to a McKinsey & Co report.
Texas’ turn against data centres upended other plans, some of the people said. Governor Greg Abbott ordered a freeze on new projects while the state collects more information about how developers and tech companies pay for electricity.
Project Braid executives said they’re unfazed.
“It is very common for individual potential sites to progress at different rates,” Benjamin Treynor Sloss, the venture’s chief executive officer, said in an emailed statement.
The neocloud factored that into planning, has a “diversified set of options” and is making “strong progress”, he added.
He said the business is on track to deliver its targeted 500 megawatts next year.
Google declined to comment, while Blackstone referred to the joint venture’s emailed statement.
Crusoe, best known for OpenAI and Oracle Corp’s flagship Stargate facility in Texas, didn’t reply to messages seeking comment.
Companies are running into the physical limits of building out AI infrastructure.
Organised opposition is forcing policymakers to scrutinise projects more vigorously, and data centres have become a potent campaign issue ahead of this year’s midterm elections. More than 60% of the capacity planned for completion in 2027 has yet to begin construction, JPMorgan Chase & Co said in a May report.
Supply shortages for switchgear and skilled labour are also creating bottlenecks.
Executives involved with Project Braid have accepted that data centre projects now have a 50% chance of meeting delivery dates, down from 90% three years ago, the people said.
That could complicate Blackstone’s goal to cement itself as the world’s largest financier of digital infrastructure.
Google is trying to bring the chips running its Gemini AI model to a broader swath of customers, and build a hardware ecosystem to better rival that of Nvidia Corp.
Many of the largest neoclouds, such as CoreWeave Inc, only run on Nvidia’s AI chips.
To make a bigger dent, Alphabet needs to build out more data centres for its Google Cloud and find partners to host its chips, known as tensor processing units.
Google, which projects as much as US$205bil of capital expenditures this year, forged the joint venture with Blackstone to limit the direct costs of its AI buildout.
The arrangement would move some spending and risks off the tech giant’s balance sheet.
Project Braid’s backers have tapped their networks to scout for new sites. In recent weeks, Google asked neocloud executives it works with for help, one person said.
Blackstone has tapped consultants and allies for new sites, other people said. — Bloomberg
