Amazon is making its largest outside investment in its three-decade history as it looks to gain an edge in the AI race. Amazon said it will spend another $2.75 billion on Anthropic, a San Francisco-based startup that is widely viewed as a front-runner in generative AI. Its foundation model and chatbot Claude competes with OpenAI and ChatGPT.
Amazon said it has made an investment of $2.75 billion more in the AI startup Anthropic. This Amazon Anthropic venture investment is as the tech giant is looking to compete with Microsoft, Google and others in the AI arms race.
Amazon’s investment in Anthropic AI
Amazon announced an initial $1.25 billion investment in Anthropic AI startup in September, and said at the time that it would invest up to $4 billion. Amazon’s investment in Anthropic AI on Wednesday marks Amazon’s second tranche of that funding.
Amazon will maintain a minority stake in the company and won’t have an Anthropic board seat, the company said. The Amazon deal was struck at the Anthropic AI startup’s last valuation, which was $18.4 billion, according to a source.
Anthropic’s funding deals
Over the past year, Anthropic closed five different funding deals worth about $7.3 billion. The company’s product directly competes with OpenAI’s ChatGPT in both the enterprise and consumer worlds, and it was founded by ex-OpenAI research executives and employees.
Amazon Anthropic venture
News of the Amazon investment partnership comes weeks after Anthropic debuted Claude 3, its newest suite of AI models that it says are its fastest and most powerful yet. The company said the most capable of its new models outperformed OpenAI’s GPT-4 and Google’s Gemini Ultra on industry benchmark tests, such as undergraduate level knowledge, graduate level reasoning and basic mathematics.
“Generative AI is poised to be the most transformational technology of our time, and we believe our strategic collaboration with Anthropic will further improve our customers’ experiences, and look forward to what’s next,” said Swami Sivasubramanian, vice president of data and AI at AWS cloud provider.
Competing in AI race
Amazon’s move is the latest in a spending blitz among cloud providers to stay ahead in the AI race. And it’s the second update in a week to Anthropic’s capital structure. Late Friday, bankruptcy filings showed crypto exchange FTX struck a deal with a group of buyers to sell the majority of its stake in Anthropic, confirming a CNBC report from last week.
Cloud providers like Amazon Web Services don’t want to be caught flat-footed.
Amazon Anthropic partnership
It’s a symbiotic relationship. As part of the agreement, Anthropic said it will use AWS as its primary cloud provider. It will also use Amazon chips to train, build and deploy its foundation models. Amazon has been designing its own chips that may eventually compete with Nvidia.
Google, meanwhile, has also backed Anthropic, with its own deal for Google Cloud. It agreed to invest up to $2 billion in Anthropic, comprising a $500 million cash infusion, with another $1.5 billion to be invested over time. Salesforce is also a backer.
Anthropic’s multimodality model
Anthropic’s new model suite, announced earlier this month, marks the first time the company has offered “multimodality,” or adding options like photo and video capabilities to generative AI.
But multimodality, and increasingly complex AI models, also lead to more potential risks. Google recently took its AI image generator, part of its Gemini chatbot, offline after users discovered historical inaccuracies and questionable responses, which circulated widely on social media.
Anthropic’s Claude 3 does not generate images. Instead, it only allows users to upload images and other documents for analysis.
Amazon and Rivian
Amazon’s biggest venture bet before Anthropic was electric vehicle maker Rivian, where it invested more than $1.3 billion. That too, was a strategic partnership.
These partnerships have been picking up in the face of more antitrust scrutiny. A drop in acquisitions by the Magnificent Seven — Amazon, Microsoft, Apple, Nvidia, Alphabet, Meta and Tesla — has been offset by an increase in venture-style investing, according to Pitchbook.
