Meta Platforms is in talks to lease computing power to Anthropic ​in a potential deal worth up to $10 billion over two years, according ‌to a source familiar with the matter.

Shares of the social media giant pared losses slightly after the news and closed down more than 2% amid a wider tech selloff ​on Friday. They were down marginally in extended trading.

Such a deal would ​help Meta diversify beyond advertising by generating revenue from its infrastructure ⁠and competing with neocloud firms such as CoreWeave (CRWV.O), opens new tab and Nebius (NBIS.O), opens new tab, as growing ​adoption of advanced AI tools boosts the need for computing capacity.

The Claude Code ​creator would pay Meta in monthly increments over the two-year period, although the terms remain subject to change, the source said, adding that the companies would be able to exit any agreement ​early.

IPO-bound Anthropic proposed the deal in June, and Meta is considering it, the source said, adding that the talks have become complicated because Meta does not have a business selling its computing power.

The discussions are in their early stages and may not result in a deal, according to the source.

Meta did not immediately respond to a Reuters request for comment, while Anthropic declined to comment.

The potential agreement echoes a strategy ​recently pursued by Elon ​Musk's SpaceX (SPCX.O), opens new tab, with ⁠whom Anthropic struck a deal in May to tap the full computing power of its Colossus 1 data centre in ​Memphis, Tennessee.

At Meta's shareholder meeting in May, CEO Mark Zuckerberg ​had said ⁠entering cloud computing was "definitely on the table," noting that firms were approaching Meta "almost every week" to buy access to its AI models or spare computing power.

Earlier this ⁠month, ​Bloomberg News reported that Meta was building a cloud ​business to sell excess computing power and host AI models for developers.