Microsoft to cut neo-cloud deals, will not renew Oracle contract
Two sources told CNBC the scope of the neo-cloud pullback is still under review, and Microsoft has not decided which providers it will exit.
Microsoft plans to reduce its partnerships with neo-cloud providers while speeding up construction of its own data centers, according to CNBC. Two sources said the company has decided not to renew its contract with Oracle.
The scale of the neo-cloud reduction is still under review, and Microsoft has not decided which providers it will end deals with, the two sources said. Microsoft has already stopped using a UK data center belonging to UK cloud company Nscale and will not renew a contract for a Texas data center.
A Microsoft spokesperson said the company regularly reviews its investments to match customer demand across its own data centers, leased facilities and strategic partnerships with outside providers.
Capacity built on outside providers
Over the past few years Microsoft formed relationships with several neo-cloud providers, including CoreWeave, Nebius, Crusoe, IREN, Lambda and Nscale, as well as Oracle. In 2022, as GPU demand surged with the release of ChatGPT, Microsoft turned to neo-cloud providers for capacity.
CoreWeave said at its listing last year that 62% of its 2024 revenue came from Microsoft. CoreWeave, Nebius and IREN shares fell by nearly half over the past month. A recent industry survey counted 323 neo-cloud providers, and experts expect many of them will not survive.
Quick answers
Is Microsoft ending its Oracle contract?
Two sources told CNBC that Microsoft has decided not to renew its contract with Oracle.
Which neo-cloud providers does Microsoft work with?
Over the past few years it formed relationships with CoreWeave, Nebius, Crusoe, IREN, Lambda and Nscale, as well as Oracle.
Has Microsoft confirmed the pullback?
Microsoft has not decided which providers it will end deals with, according to the sources, and a spokesperson said the company regularly reviews its investments to match customer demand.