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Amazon has invested an additional $4 billion in artificial intelligence startup Anthropic, doubling its total investment in the company to $8 billion, as competition from Big Tech to dominate the generative AI space intensifies.
The deal marks Amazon’s largest venture investment ever since it initially committed $1.25 billion to the San Francisco-based group last September, increasing to $4 billion at the end of March. do.
The funding is one of many investment partnerships between AI startups and so-called hyperscalers, or large cloud service providers, over the past year.
Microsoft has invested more than $13 billion in OpenAI, while backing French AI startups Mistral and Abu Dhabi-based G42. Google has a deal with Cohere to provide cloud infrastructure to train the Canadian startup’s AI software.
Dario Amodei, co-founder and CEO of Anthropic, said it was a “year of tremendous growth” for his company’s AI software, Claude.
“Working with Amazon has helped us bring Claude’s capabilities to millions of end users across tens of thousands of customers,” he added. “We look forward to working with Amazon to train and power our cutting-edge AI models.”
Anthropic was last valued at just over $18 billion earlier this year after raising $750 million in a funding round led by venture capital firm Menlo Ventures. Since then, arch-rivals OpenAI and Elon Musk’s xAI have seen their valuations jump to $150 billion and $45 billion, respectively, with new funding rounds.
As the race to build more powerful AI systems accelerates, the capital-intensive nature of this technology is driving consolidation in the field.
The founders and staff of AI startups such as Adept, Inflection, and Character AI are employed by Amazon, Microsoft, and Alphabet, respectively. Big tech groups have paid billions of dollars in deals aimed at absorbing top talent from emerging AI companies without ending up with outright acquisitions.
Big Tech companies are developing AI software and are the primary financiers of the space, building cloud infrastructure to run AI services built by third-party customers.
Anthropic was founded by former OpenAI researchers and is known for its chatbot Claude, which outperforms OpenAI’s GPT-4 on many industry benchmarks. The company previously received a $2 billion investment from Google.
The new deal with Amazon deepens Anthropic’s technology partnership with the online retail giant’s cloud and chip products, but does not prevent it from collaborating with other companies such as Google or Nvidia.
Amazon is already working on incorporating Anthropic’s Claude model into the next generation of its Alexa speakers to power its “conversational” AI system.
Capital spending at the big four hyperscalers — Amazon, Microsoft, Meta and Google — rose more than 62% year-over-year in the quarter to about $60 billion, according to recent financial reports.
Meta and Amazon are among the companies that reassured market demand for generative AI infrastructure and services while pointing to further increases in spending next year.
Amazon’s bet on Anthropic has come under scrutiny from regulators in the US, UK and EU over concerns that deals between Big Tech and the most prominent AI startups could pose anticompetitive risks. It was held in the midst of a deep crisis.
The UK competition authority recently reviewed Google’s agreement with Anthropic but did not subject it to further investigation.
Additional reporting by George Hammond in San Francisco
