Amazon to Invest Up to $4 Billion in Anthropic as AI Arms Race Escalates
Deal, which includes broad partnership, follows Microsoft’s multibillion-dollar stake in rival startup OpenAI
· Microsoft invested $10 billion in the chatbot’s maker, OpenAI, taking a 49% stake as part of an extensive partnership.
· Large language models, the algorithms that power chatbots such as ChatGPT and Claude, require huge amounts of capital to build and train, and startups spend that money largely on cloud-computing costs.
Amazon.com said it has agreed to invest up to $4 billion in artificial-intelligence company Anthropic, the latest big startup investment by tech giants jockeying for an edge in the AI arms race.
Amazon said that, as part of the deal, Anthropic would be using its custom chips to build and deploy its AI software. Amazon also agreed to incorporate Anthropic’s technology into products across its business.
People familiar with the deal said Amazon has committed to an initial $1.25 billion investment in two-year-old Anthropic, a number that could grow to $4 billion over time depending on certain conditions. As part of the agreement, Anthropic has agreed to spend a certain amount of the capital on Amazon’s cloud infrastructure business, Amazon Web Services, one of the people said. The specifics of that arrangement couldn’t be learned.
Tech giants and venture capitalists have been investing heavily into AI startups this year, following the breakout success of the ChatGPT bot, which can produce humanlike writing and computer code. In January,
Microsoft invested $10 billion in the chatbot’s maker, OpenAI, taking a 49% stake as part of an extensive partnership. Google invested more than $300 million in Anthropic in May.
Salesforce has also invested in a series of AI startups, including Anthropic and OpenAI rival Cohere.
Anthropic, founded in 2021, offers an AI assistant called Claude that competes with ChatGPT. Led by siblings Dario and Daniela Amodei, who both used to work at OpenAI, the company claims its technology is safer and more reliable than that of competitors.
In taking money from Amazon as well as Google, Anthropic is embracing several cloud infrastructure companies, which also distinguishes it from the exclusive partnership OpenAI has with Microsoft.
Amazon’s minority stake in Anthropic is intended to be part of a new fundraising round, at a valuation yet to be determined, one of the people familiar with the situation said.
Anthropic’s early backers included crypto entrepreneur Sam Bankman-Fried. In May, it announced it had raised $450 million from investors including Google, Spark Capital and Salesforce. Its valuation at the time was $4 billion, according to people familiar with the matter.
Amazon, which runs the largest cloud-computing business, has been shifting its strategy somewhat in backing AI startups. Previously, the company had preferred to remain neutral among the competing AI startups and focused on providing a wide selection of different AI services on its cloud infrastructure. Last month, Amazon was one of several tech companies that participated in a $235 million funding round in AI startup Hugging Face.
Earlier this month, Amazon Web Services Chief Executive Adam Selipsky said its strategy was giving customers who want to build AI features as much flexibility as possible, rather than being hemmed into a single provider.
“We firmly believe there will not be one model to rule them all,” Selipsky said at the time, though he added that Amazon was “open to investments if the right opportunity comes along.”
Anthropic has used Amazon’s cloud service since 2021. It also uses Google’s rival cloud service. As part of the new deal, AWS will become Anthropic’s primary cloud provider for what the companies called “mission critical workloads,” and Anthropic plans to run the majority of its workloads on Amazon’s cloud.
Large language models, the algorithms that power chatbots such as ChatGPT and Claude, require huge amounts of capital to build and train, and startups spend that money largely on cloud-computing costs. Of the billions of dollars that OpenAI has raised from Microsoft, much of it has been spent on the tech giant’s AI business Azure.
Despite the excitement and investment in AI, it still makes up only a fraction of the revenue flowing into cloud-computing businesses. In its latest earnings call, Microsoft projected that, of the 26% quarterly revenue growth it expected in its Azure business, two percentage points would come from its AI services.