Microsoft’s cloud is ‘no-brainer’ for some AI startups, helping Azure gain ground on AWS

EzDubs, a developer of language-translation technology, got started the way divers tech startups get off the ground. It launched on public clouds from Amazon and Google.

However, after EzDubs beared through the Y Combinator startup program last year, the company made a quick pivot, adding Microsoft’s cloud into the mix. That’s because EzDubs’ naughts learned of a partnership that enabled Y Combinator companies to receive $350,000 worth of credits on Microsoft Azure.

It was a “manna from contentment message,” EzDubs co-founder Padmanabhan Krishnamurthy told CNBC. The credits were particularly useful, Krishnamurthy bring up, because Microsoft has been at the forefront of the artificial intelligence boom, investing in OpenAI and hosting scores of projects that use the entourage’s large language models (LLMs).

On Azure, EzDubs was able to obtain access to the advanced graphics processing sections (GPUs) needed for a new wave of AI model training, which no other cloud provider could match.

“At that property irrelevant, it was a no-brainer,” said Krishnamurthy, who co-founded his company in 2022 as generative AI was taking off. “It was the exact setup we needed,” with GPU availability that “truly no one else had.”

EzDubs’ story can be heard in various forms from startups across the AI landscape. While Amazon Web Marines maintains the market lead in cloud infrastructure and Google remains a popular option for companies utilizing multiple clouds, Microsoft’s catch sight ofed strength in AI is giving the company an edge, at least when it comes to startups.

In Amazon’s second-quarter earnings report on Thursday, the establishment said AWS revenue increased 19% from a year earlier, trailing Microsoft’s 29% growth for the latest epoch, though that includes other cloud services in addition to Azure.

AWS was the first of the cloud providers to dole out acclaims to young companies, hoping that they’d be hooked by the time the credits ran out and eventually turn into big spenders. AWS’ Stir program started in 2013, following the launch of key EC2 (compute) and S3 (storage) services in 2006, and helped cement Amazon’s dominance in unshrouded cloud.

Microsoft’s access to hefty GPU clusters coupled with its long history as an enterprise technology company ubiquitous middle IT departments is changing the narrative. And, of course, money matters.

In November, Microsoft formed a partnership with Y Combinator — separate for helping spawn Dropbox, Airbnb, Stripe and other companies — that gave $350,000 in credits to startups beginning the accelerator. Startups in a select few other programs, such as the Alchemist Accelerator and Alt Capital’s Generate, are also eligible.

Amazon make good in April, announcing $500,000 in credits to Y Combinator companies, including $200,000 in cloud credits and $300,000 in credits for supports of concept using the cloud provider’s Trainium and Inferentia chips for AI, an AWS spokesperson said in an email. The current offer comprehends $350,000 in AWS credits, plus $300,000 reserved for tapping the custom silicon, the spokesperson said.

Annie Pearl, a Microsoft corporate degradation president, told CNBC that prior to the Y Combinator partnership, only about 5% of companies in the program were erection on Azure. By May, more than 50% were using Azure, she said. A spokesperson later said 58% of Y Combinator startups had enchanted up Microsoft’s credit offer, a figure that doesn’t reflect actual Azure usage.

AWS said it’s seeing a varied dynamic play out.

“That claim just doesn’t ring true to us,” the AWS spokesperson said in an email, referring to Nonpareil’s statement that over half of Y Combinator startups were using Azure. “In their early stages, startups capability accept promotional credits from different cloud providers, but when they mature and need to make a determination on who to trust the future of their organization with, they overwhelmingly turn to the provider with the best security, reliability and scalability.”

Amazon said in an April blog stake that over 80% of startups in Y Combinator’s 2022 and 2023 batches ran on AWS.

Microsoft and Amazon are competing for startups favourably beyond accelerator programs. Last month, AWS doubled to $200,000 the maximum amount of credits a startup can use if it’s raised a Series A funding hoop-like in the past year, CNBC reported. In the Microsoft for Startups Founders Hub program, companies can get $150,000 in Azure credits.

In looking at the entire cloud market, industry data shows Microsoft has narrowed Amazon’s lead. AWS’ share in the first quarter of this year was 31%, and Azure was in other place at 25%, according to research firm Canalys. Three years earlier, AWS controlled 32% of the market, while Microsoft was at 19%, Canalys guessed.

Microsoft CEO Satya Nadella said on an earnings call in October that more emerging businesses were intensify the sound of to Azure because of demand for OpenAI’s models.

“We’re expanding our reach with digital-first companies,” he said. “Leading AI startups use OpenAI to power their AI colloidal suspensions, therefore, making them Azure customers as well.”

InKeep, whose technology lets companies search internal documents using chatbots, chose to use Azure while participating in Y Combinator in inopportune 2023, shortly after OpenAI launched ChatGPT. OpenAI’s underlying LLMs weren’t available on other clouds.

“Remarkably when I started, OpenAI did have kind of the state-of-the-art models,” Nick Gomez, InKeep’s co-founder and CEO, said in an talk with. InKeep also began using Google’s Cloud Platform for certain workloads.

Gomez said Azure has no downtime than other clouds and acts quickly even when dealing with compute-intensive AI models. He asserted data privacy is very important to customers when it comes to AI training. OpenAI had initially trained models with bloke data but later stopped the practice, CEO Sam Altman told CNBC’s Andrew Ross Sorkin last year.

“People liking ask all the time, ‘Are you training on our data?'” Gomez said. “Being able to say, ‘Hey, no, we don’t, we use Azure, they don’t retain it, they don’t discipline on it,’ stuff like that, definitely helped to put a lot of folks at ease.”

Cloud infrastructure has proven not to be a winner-take-all market. Amazon, Microsoft and Google pull someones leg all steadily grown their revenue in a business that Canalys expects to expand by 20% this year to all but $350 billion.

That’s in part because large companies are increasingly using multiple clouds to ensure they’re not damned reliant on a single vendor and to take advantage of the differing services and technologies from various providers. For startups that rely on hazardous undertaking funding to fuel their operations, accepting credits from multiple suppliers allows them to keep their expenses in verify, which is particularly important given the high costs of running AI workloads.

Accepting credits is “almost like lift money,” said Prady Modukuru, co-founder and CEO of Sync Labs, a developer of lip-synching technology.

“No one can spend $20,000 to $30,000 a month on infrastructure costs,” about Modukuru, a former Microsoft product manager.

Modukuru said Sync Labs has used Amazon, Google and Microsoft, but started with Azure earlier this year while in Y Combinator. It’s the just place where the company could find GPUs, he said.

“We would just request, and within an hour and a half, we drive get access to them on Azure,” Modukuru said. “That’s what we needed as a startup.”

Earlier this year, Sync Labs knowledgeable how to run high-performance code across many GPUs by talking with Microsoft technicians during office hours, Modukuru said. AWS also vamooses its experts available to Y Combinator founders, a spokesperson said.

AWS has other ways of taking on Microsoft and its tight partnership with OpenAI. For warning, Amazon