Updated version 3 - According to Bloomberg, Microsoft is phasing out the agreement with Oracle on leasing AI cloud computing power.

Added Oracle’s response in paragraph 5, and supplemented background information throughout the article.

Reuters, November 6 - According to Bloomberg on Friday citing people familiar with the matter, Microsoft (MSFT.O) is gradually ending its agreement with Oracle (ORCL.N) for leasing artificial intelligence computing resources, as part of a broader reassessment of its multi-billion dollar cloud partnership.

Oracle and Microsoft shares remained flat in afternoon trading. This week, as the Democratic Party achieved a sweeping victory in the US midterm elections, concerns grew in the market over stricter regulation, which could threaten the rapid expansion of the artificial intelligence sector. Both companies’ share prices came under pressure.

According to Bloomberg, after Microsoft declined to renew the contract, it has gradually stopped using the computing capacity rented from Oracle over the past several months.

The report added that the value of these leased computing resources has decreased over time as they could no longer meet Microsoft’s evolving needs, and noted that Oracle’s hardware uses previous-generation Nvidia NVDA.O chips.

“Demand for AI infrastructure on OCI (Oracle Cloud Infrastructure) remains strong, including for earlier-generation GPUs,” an Oracle spokesperson told Reuters.

Microsoft has not yet responded to Reuters’ request for comment.

The report further underscores that Microsoft is reconsidering how to secure computing power to make the most of its massive investment in artificial intelligence.

AI cloud company IREN IREN.O said Thursday (link) that due to Microsoft’s request to adjust its network design, the company has delayed the delivery of some infrastructure.

This move caused IREN to postpone its goal of exceeding $4 billion in annualized revenue capacity from the end of the year to January, and it could be delayed further to late February.

Earlier Thursday, Bloomberg reported that in light of project delays and rising costs, Microsoft is stepping up oversight of certain data center projects operated by emerging cloud service providers including IREN, Nebius, and Nscale.

Oracle announced in 2023 that it had reached a multi-year agreement with Microsoft, stating that the Windows maker would use OCI AI infrastructure to support an AI-assisted version of its Bing search engine. Financial terms of the deal were not disclosed.

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