What Regulators Should Do About The AI Industry's Hidden Financial Loop
By last year, Microsoft had committed $13 billion to OpenAI — but much of that investment has never left the tech giant’s own balance sheet. A significant portion of the money reportedly has flowed in the form of credits for Microsoft’s Azure cloud infrastructure. OpenAI spent those credits training its artificial intelligence models, Microsoft booked the usage as cloud revenue and that revenue growth supported the stock price that justified the next round of investment.
This is not a one-off arrangement. A January 2025 report by the Federal Trade Commission on AI partnerships documented similar patterns across the industry, including partnerships between Google and Anthropic and Amazon and Anthropic. Nvidia has played an analogous role. After profiting from the sale of Graphics Processing Units (GPU), it has reinvested in AI infrastructure startups like CoreWeave, which use the funds to buy more Nvidia chips, flowing right back to Nvidia’s reported revenue. Bloomberg has described these arrangements as “AI circular deals”.
I call this dynamic the cloud credit circuit. It matters for three reasons that current policy frameworks are not equipped to address.
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