Here is what I think is going on in this announcement. Take the 4 major commodity cloud companies (Google, Microsoft, Amazon, Oracle) and determine: do they have big data centers and do they have their own AI product organization?

- Google has a massive data center division (Google Cloud / GCP) and a massive AI product division (Deep Mind / Gemini).

- Microsoft has a massive data center division (Azure) but no significant AI product division; for the most part, they build their "Copilot" functionality atop their partner version of the OpenAI APIs.

- Amazon has a massive data center division (Amazon Web Services / AWS) but no significant AI product division; for the most part, they are hedging their bets here with an investment in Anthropic and support for running models inside AWS (e.g. Bedrock).

- Oracle has a massive data center division (Oracle Cloud / OCI) but no significant AI product division.

Now look at OpenAI by comparison. OpenAI has no data center division, as the whole company is basically the AI product division and related R&D. But, at the moment, their data centers come exclusively from their partnership with Microsoft.

This announcement is OpenAI succeeding in a multi-party negotiation with Microsoft, Oracle, and the new administration of the US Gov't. Oracle will build the new data centers, which it knows how to do. OpenAI will use the compute in these new data centers, which it knows how to do. Microsoft granted OpenAI an exception to their exclusive cloud compute licensing arrangement, due to this special circumstance. Masa helps raise the money for the joint venture, which he knows how to do. US Gov't puts its seal on it to make it a more valuable joint venture and to clear regulatory roadblocks for big parallel data center build-outs. The current administration gets to take credit as "doing something in the AI space," while also framing it in national industrial policy terms ("data centers built in the USA").

The clear winner in all of this is OpenAI, which has politically and economically navigated its way to a multi-cloud arrangement, while still outsourcing physical data center management to Microsoft and Oracle. Probably their deal with Oracle will end up looking like their deal with Microsoft, where the trade is compute capacity for API credits that Oracle can use in its higher level database products.

OpenAI probably only needs two well-capitalized hardware providers competing for their CPU+GPU business in order to have a "good enough" commodity market to carry them to the next level of scaling, and now they have it.

Google increasingly has a strategic reason not to sell OpenAI any of its cloud compute, and Amazon could be headed in that direction too. So this was more strategically (and existentially) important to OpenAI than one might have imagined.