Blackstone, KKR in talks with Google to bring AI models to portfolio firms

[NEW YORK] Blackstone and KKR are in talks with Alphabet to give the companies they own access to Google’s artificial intelligence models, according to sources familiar with the matter.

The talks come as OpenAI and Anthropic PBC are each partnering with alternative asset managers to form AI consultancies that will turn private equity-backed firms into a new revenue source for AI companies.

In addition to Blackstone and KKR, Alphabet is also in discussions with private equity firm EQT, the sources said, asking not to be identified as the discussions are confidential. The discussions are not exclusive, and there are no assurances they will lead to a deal, the sources said.

Representatives for Blackstone, EQT, KKR and Google declined to comment.

Some of the biggest private equity managers, such as Blackstone and KKR, have injected billions into data centres and other key aspects of the AI play, and the latest discussions stand to make the investment firms an even bigger presence in the boom. They also thrust some of AI’s biggest champions deeper into a debate on the risks of throwing so much money at a nascent industry.

“A couple of years ago, private equity firms were waiting to see what was happening with AI and its impact, encouraging their portfolio companies to do trials around adoption,” said Tanveer Kapadia, partner at Boston Consulting Group. “Now they are getting more actively involved.”

Unlike the OpenAI and Anthropic arrangements, the Google deals would not create a separate consulting business, the sources said.

The consultancies are set to give the AI developers a ready base of customers on which to test their services. Such enterprise contracts also help AI startups weather a more fickle consumer base.

The joint ventures could one day hire hundreds of engineers to handle contracts ranging from US$1 million to US$10 million, according to one of the sources familiar with the matter.

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With Google, though, the private equity firms will negotiate omnibus agreements that would grant a slew of their portfolio companies access to AI models, giving Alphabet access to a swath of companies it previously did not have easy ways to sell to.

“Honestly speaking, even Google does not have those customers, and the bigger technology companies have ignored that customer base,” Google Cloud’s Karthik Narain said in an interview after the firm struck a deal with Vista Equity Partners.

For the buyout firms, the partnerships stand to bolster prior investments at risk of being displaced by AI. The stocks of software companies have been hammered amid fears that AI will disrupt their business model and render their tools redundant. This has put new pressure on private equity managers to press software firms they bankroll to weave AI into their operations and offerings to stay relevant.

In April, Google Cloud and Vista Equity Partners announced a multiyear partnership that will drive Gemini and AI tools across the private equity firm’s portfolio of more than 90 software companies. Google has also struck deals with private equity firms Thoma Bravo and CVC Capital Partners.

On Monday (May 4), Bloomberg News reported that OpenAI raised more than US$4 billion from TPG, Brookfield Asset Management, Advent International and Bain Capital for a firm aimed at helping businesses use its AI software. Shortly after that, Anthropic announced it was pairing up with Blackstone, Hellman & Friedman and Goldman Sachs to form a similar company.

Nobody knows which firms will win the AI race. Some firms, such as Blackstone, have considered deals with more than one AI firm, allowing them to spread their bets on different players in an industry that’s still finding its footing.

On Tuesday, Thoma Bravo managing partner Seth Boro said that the firm worked quickly on the Google deal but also described its approach to AI as “model agnostic”.

“We have great relationships with OpenAI, with Anthropic,” he said. “We have ongoing discussions all the time.”

Anthropic has been feuding with the Trump administration after the startup refused to give the US military unfettered access to its AI tools. Meanwhile, OpenAI is embroiled in a legal battle with early backer Elon Musk and missed its own targets for new users and revenue, The Wall Street Journal reported.

OpenAI chief financial officer Sarah Friar pushed back on concerns about missing internal goals. BLOOMBERG