Google's Massive $15 Billion Bet on Indian AI Market
Google is witnessing surging demand for its Gemini artificial intelligence platform from Indian businesses, enabling its cloud services to expand at a faster pace than its two larger competitors, Microsoft and Amazon. This growing appetite for AI solutions has prompted Google to make its most substantial investment in India to date—a massive $15 billion commitment to establish a 1 gigawatt data center in Andhra Pradesh.
AI Driving Google Cloud's Accelerated Growth
According to Matt Renner, president of global revenue at Google Cloud, the company is experiencing remarkable growth momentum in the Indian market. "We're seeing a very strong demand increase for Google Cloud, and that is seen through public data. We're seeing our overall growth rates increase over the last three quarters," Renner stated. "We're getting larger as a company, but we're growing faster. That's not necessarily happening at the same pace as our competitors."
The executive emphasized that artificial intelligence has fundamentally transformed client conversations about cloud providers. While discussions previously centered around technical capabilities with Amazon and Microsoft, AI has become the primary differentiator. "Simply put, Google can do what its competitors can do, but they can't do everything that we can," Renner added confidently.
India's Strategic Importance in Global Cloud Race
Despite India currently representing a small fraction of the global cloud computing market, Google views the country as strategically crucial. Data from consultancy firm Gartner reveals that data center spending from Indian businesses is projected to reach $4.8 billion by end-2025—merely 1% of the global $475 billion data center spending. In overall cloud services, India is expected to spend $160 billion this year, accounting for 3% of the $5.4 trillion spent globally.
Renner vouched for India's significance, stating, "The $15 billion investment is evidence of our continued material investments in India. This is because of the demand we're already seeing, and what we expect from India. There's a lot of focus from Indian enterprises, as well as consumers when it comes to AI."
Google faces substantial ground to cover in the Indian cloud market. Recent financial data shows Google earned ₹1,963 crore from cloud services in India in FY24, significantly trailing Amazon Web Services' ₹14,446 crore and Microsoft's ₹16,531 crore in service income as of March 2024.
The Uphill Battle Against Established Giants
Industry experts caution that Google's path to catching up won't be straightforward. Cloud platform contracts typically involve long-term commitments, making it expensive and complex for businesses to migrate their data, applications, and services between providers.
Sanchit Vir Gogia, chief executive at Greyhound Research, explained the competitive landscape: "Procurement patterns still favour incumbents. Azure is too embedded across enterprise IT stacks to be easily displaced, especially when AI is integrated into day-to-day workflows via Office 365 and Dynamics. AWS, meanwhile, continues to hold ground with technically mature teams and compliance-driven industries that value reliability over reinvention."
Microsoft's strong position in India was further emphasized by Himani Agrawal, chief operating officer of Microsoft India and South Asia, who noted that 90 of the top 100 NSE companies now use Azure, underscoring their leadership in powering the nation's digital core.
Gogia summarized Google's current position: "Google, for now, is winning add-on workloads, not entire cloud estates. It's being brought in as a specialist, an AI sidecar, rather than the primary driver. That may change over time, but for now, Google's growth reflects experimentation, not defection."
Jayanth Kolla from Convergence Catalyst added perspective: "Many companies move across cloud platforms in order to not be tied down to convoluted contractual terms from the Big Tech providers. But, Google has typically not fared well when it comes to offering a differentiated cloud platform as compared with its rivals. Whether it can do so this time around, with AI, is what could define if it can poach cloud deals from its rivals."
Global quarterly financial data highlights the competitive challenge: Google's cloud business grew 12% sequentially to $15.2 billion during the September quarter, while AWS remained the global leader with $33 billion in revenue, and Microsoft followed closely with $30.9 billion.
