This week Microsoft and Cruise announced a $2 billion investment from the former into the latter. The focus of the partnership is squarely on cloud computing. Press releases from both companies specified Microsoft as the “preferred cloud provider” of both Cruise and General Motors.
“Microsoft, as Cruise’s preferred cloud provider…”
“As Cruise and GM’s preferred cloud, we will apply the power of Azure to help them scale…”
“GM will work with Microsoft as its preferred public cloud provider”
What does it mean to be a “preferred cloud provider?”
Preference vs. Exclusivity
For starters, it seems likely that “preferred” does not mean “exclusive.”
That’s notable because a number of recent Waymo partnerships (with auto manufacturers, not with cloud providers) have referred to Waymo as an “exclusive” partner. For example:
“Waymo is now the exclusive global L4 partner for Volvo Car Group…”
Credits vs. Cash
I also wonder whether this framing means that Microsoft didn’t invest actual cash in Cruise, or at least not the headline $2 billion.
I remember hearing rumors (or maybe it was official) after Honda’s investment in Cruise, that much of that investment came in the form of manufacturing credits at Honda plants, not cash dollars. Similarly, I wonder if any of the $2 billion take the form of Azure credits.
This investment values Cruise at $30 billion, which is basically the same as Waymo’s recent valuation about a year ago. This is a testament to Cruise’s progress. The valuation might also indicate of how eager Microsoft is for Cruise to become a credible competitor to Waymo, and (more importantly) Alphabet.
Partnerships vs. Purchase Orders
One of my favorite quotes in the tech industry is, “Favorite partnership for me is a purchase order. Defined charter, beginning, end.”
Waymo seems to mostly adhere to this philosophy. Their “partnerships”, mostly with automotive manufacturers, seem to largely amount to vendor-customer relationships.
Cruise, as well as most other companies in the self-driving industry, tend toward more a wider range of partnerships. The Microsoft investment might fall in that category, depending on the structure. Of course, it may also be a straightforward cash-for-equity transaction.
In any case, $30 billion is pretty amazing. Go Cruise!