Microsoft is winding down Oracle deal to rent AI cloud capacity, Bloomberg News reports

Microsoft is phasing out its arrangement to rent AI cloud computing capacity from Oracle, according to a report by Bloomberg News. The move comes as part of a broader evaluation of the company's extensive cloud partnerships, valued in the billions of dollars. Sources familiar with the matter indicated that Microsoft had recently ceased renewing the contract with Oracle, leading to the cessation of rented computing resources.

As Microsoft no longer finds the rented capacity useful due to evolving needs, the report stated that the Oracle hardware, powered by older Nvidia chips, became less valuable over time. Despite this, Oracle's AI infrastructure, including earlier-generation GPUs, continues to be in demand. An Oracle spokesperson confirmed this to Reuters, but Microsoft declined to comment.

This development adds to indications that Microsoft is reevaluating its approach to securing computing capacity in order to maximize benefits from its substantial AI investments. Following this, Oracle announced a multi-year deal in 2023, with Microsoft utilizing Oracle Cloud Infrastructure (OCI) AI resources to support the AI-driven Bing search engine.