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Amazon has committed an additional $2.75 billion to AI startup Anthropic, strengthening its ties with the company as the race for Big Tech to dominate the booming AI sector intensifies.
The deal is Amazon's largest venture investment ever, and brings its total commitment to Anthropic to $4 billion. The partnership is one of a number struck between AI startups and tech giants over the past year, with Google, Microsoft, Amazon and others betting that strength in generative AI will be their biggest competitive advantage for years to come.
Amazon invested an initial amount of $1.25 billion in September last year, and has reserved the right to increase this total amount to $4 billion before the end of March.
Anthropic has separately raised hundreds of millions of dollars from venture capitalists. Combined, the deals could ultimately provide Anthropic with billions of dollars in capital and credits for the use of cloud and computing services, worth more than $18 billion, according to people familiar with the discussions.
Amazon is upping its bet on Anthropic, even as scrutiny from regulators in the US, UK and EU grows over concerns that deals between big tech companies and top AI startups could pose anti-competitive risks.
Microsoft has taken an early lead in generative AI, committing $13 billion to OpenAI, whose chatbot ChatGPT has ignited a wave of investor excitement about the fast-developing technology. Microsoft has since invested in European AI startup Mistral, and last week closed a $650 million deal to hire the leadership team and researchers from AI company Inflection, according to a person familiar with the deal.
The Amazon Anthropic deal gives the Seattle-based company a well-known partner in the AI space as it competes with rivals Microsoft and Google for dominance in the field.
Amazon confirmed on Wednesday that it will be Anthropic's “primary cloud provider” for key workloads, which will run on Amazon Web Services. Anthropic will also use AI computer chips developed internally by Amazon, and work with the cloud provider to develop and improve the hardware, which is intended to compete with Nvidia's highly sought-after chips.
However, the deal does not tie Anthropic exclusively to Amazon's cloud, as OpenAI's partnership with Microsoft does, and the startup will continue to use Google's cloud as well. Google has agreed to invest up to $2 billion in Anthropic, according to a person familiar with the deal.
Anthropic was founded in 2021 by a group of researchers who left OpenAI over concerns about its commitment to AI safety. The San Francisco-headquartered company is widely seen as the most likely challenger to OpenAI's early dominance of the sector. Its latest model, Claude 3, outperforms OpenAI's GPT4 on a number of industry benchmarks.
The company is selling stock at $30 each in an effort to raise cash and computing credits to fund the expensive development of cutting-edge artificial intelligence models, according to people familiar with the deal.
Venture capital investors also expect to commit at least $750 million to the company in a round expected to close in April, according to the people. The bulk of that total was raised through a special purpose vehicle created by Silicon Valley firm Menlo Ventures, an existing philanthropic investor, they added.
One of Anthropic's early investors was Sam Bankman-Fried's failed cryptocurrency group FTX, which has since sold the bulk of its stake in the company as part of bankruptcy proceedings. A fund owned by Abu Dhabi sovereign wealth fund Mubadala has agreed to buy a majority stake in FTX for $500 million, according to court filings last week.
