By ByteBot
On December 19, 2025, Google Cloud and Palo Alto Networks announced a “landmark” $10 billion security partnership. But examine the structure: Palo Alto commits to spending approximately $10 billion on Google Cloud services and AI models over multiple years, and Google books it as revenue. It’s circular financing dressed as security innovation—the same pattern we covered with Amazon and OpenAI just days ago.
The $10 Billion Circular Deal
Here’s how this works. Palo Alto Networks will migrate key internal workloads to Google Cloud, use Google’s Vertex AI platform and Gemini large language models, and commit to paying Google Cloud a sum approaching $10 billion over several years. Google books Palo Alto’s spending as cloud revenue. The investment money flows in a loop.
This isn’t Google’s first major cloud security deal, but it’s their biggest. The two companies have worked together since 2018 and already have 75+ joint integrations and $2 billion in prior marketplace sales. This new agreement deepens that relationship—and the dependencies that come with it.
The structure mirrors other recent circular deals. Amazon is investing $10 billion in OpenAI, with OpenAI required to use AWS infrastructure. Microsoft invested $13.8 billion in OpenAI and secured a $250 billion Azure commitment through 2032. Oracle signed a $300 billion cloud deal with OpenAI. The pattern is now standard: cloud vendors invest in AI companies, AI companies commit massive spending back to those cloud vendors.
The Real AI Security Threat
To be fair, AI security threats are genuine. Palo Alto Networks’ State of Cloud Security Report found that 99% of organizations experienced at least one attack on their AI infrastructure in the past year. API attacks jumped 41% year-over-year, driven by agentic AI’s heavy reliance on APIs. The threat landscape is real and expanding.
Development speed is outpacing security capabilities. 52% of teams are shipping code weekly, but only 18% can fix vulnerabilities at that same pace. GenAI-assisted coding—used by 99% of survey respondents—is generating insecure code faster than security teams can review it. 53% cite weak identity and access management practices as their top challenge.
These are legitimate problems that need solving. The question isn’t whether AI security matters. It does. The question is whether circular financing deals solve security problems or just create vendor lock-in.
Prisma AIRS: Capabilities vs Lock-In
Palo Alto’s Prisma AIRS is a comprehensive AI security platform. It includes an AI Runtime Firewall that protects against prompt injections, data leakage, and model denial-of-service attacks. AI Model Security ensures only vulnerability-free models reach production. AI Red Teaming runs automated penetration tests. The capabilities are substantial.
But here’s the lock-in mechanism: Prisma AIRS now integrates deeply with Google’s Vertex AI and Gemini models. That’s on top of the 75+ existing integrations between Palo Alto and Google Cloud. Every additional integration increases migration complexity. Security tooling creates some of the hardest dependencies to unwind because it touches every layer of your infrastructure.
The platform solves real problems. It also ties you more tightly to Google Cloud with every feature you adopt.
Circular Financing Is Now the Norm
This isn’t an isolated deal. Circular financing has become standard practice across the cloud and AI industry. OpenAI alone has approximately $1 trillion in circular infrastructure commitments across multiple vendors. AI startups captured more than half of all global venture capital dollars in 2025—the first time a single technology sector has claimed a majority share.
Critics compare this to dot-com era “round-tripping” schemes where companies bought each other’s services to inflate revenues. The Nasdaq fell 77% in March 2000 after similar circular deals unraveled, and it took 15 years to recover. Today’s deals involve tangible assets like GPUs and cloud capacity, and Big Tech companies have stronger balance sheets with projected free cash flow of $203 billion in 2025. But the circular pattern concentrates risk among interconnected players. If one major deal fails, effects could cascade.
Regulators are taking notice. The UK’s Competition and Markets Authority is actively probing cloud-AI tie-ups, adding scrutiny to these arrangements.
What Developers Need to Know
If you’re making cloud and security decisions for your organization, understand what you’re buying into. 89% of organizations have adopted multi-cloud strategies to reduce vendor lock-in, but security integrations make that harder. The choice of which cloud provider to use for AI workloads has long-term flexibility implications.
When evaluating a “partnership” announcement, look at the money flow. Does the investment capital loop back through service commitments? If yes, you’re looking at circular financing, not a traditional partnership. That doesn’t mean the technology is bad, but it does mean the vendor’s incentives are focused on locking in revenue, not just solving your security problems.
The AI security threats are real. The 99% attack rate is alarming. But be skeptical when the solution comes packaged as a multi-billion dollar circular deal. Ask whether you’re getting genuine innovation or just deeper vendor dependencies.
Google’s $10 billion bet on Palo Alto Networks isn’t really about Palo Alto. It’s about making sure the money—and the customers—flow through Google Cloud.
