Amazon has made its largest outside investment in thirty years. This was done to gain an advantage in the artificial intelligence race. The tech giant announced that it will invest $2.75 billion in Anthropic, a San Francisco-based firm widely considered a leader in generative artificial intelligence. Its chatbot Claude and foundation approach compete with OpenAI and ChatGPT.
The companies announced their initial investment of $1.25 billion in September, and Amazon committed to contributing up to $4 billion at the time. The news that was made on Wednesday signifies Amazon’s second round of funding. According to the company, Amazon will not hold a seat on the Anthropic board and will maintain its minority ownership stake in the company. A source claims that the agreement was made at the AI startup’s prior $18.4 billion valuation.
Anthropic has concluded five investment rounds, totalling approximately $7.3 billion in the last year. The company was designed by former research executives and workers of OpenAI. Its product is a direct competitor of OpenAI’s ChatGPT in both the enterprise and consumer markets.
Anthropic Boasts Powerful New AI Models
A few weeks after Anthropic released Claude 3, its most recent collection of AI models—which the company describes as its fastest and most powerful to date—the news of Amazon’s investment was made public. In industry-standard assessments such as bachelor-level comprehension, graduate-level reasoning, and basic mathematics, the most effective of the company’s new models performed better than Google’s Gemini Ultra and OpenAI’s GPT-4.
Swami Sivasubramanian, the vice president of data and AI at AWS cloud provider, stated that the most revolutionary technology of their time is likely generative artificial intelligence (AI). He also thinks that their strategic partnership with Anthropic will enhance our customers’ experiences even more.
From Niche to $29 Billion Industry in One Year
According to Pitchbook, a US-based capital marketing firm, the phrase “generative AI” became widely used in corporate circles almost immediately, and in the last year, the industry has flourished, with a record $29.1 billion invested in nearly 700 acquisitions by 2023. In late 2022, OpenAI’s ChatGPT first demonstrated the technology’s capacity to generate original material and language like that of a human. Since then, the platform has reportedly been used by more than 92% of Fortune 500 businesses, including those in the financial services, legal, and educational sectors.
Cloud service providers such as Amazon Web Services wish to prepare quickly. The connection is symbiotic. Anthropic stated that it will use AWS as its primary cloud provider by the agreement. Additionally, it will train, construct, and implement its foundation models using Amazon chips. Amazon has been working on creating chips of its own that could one day take on Nvidia.
Microsoft made a well-publicised investment in OpenAI as part of their spending binge. Given that the startup’s valuation has surpassed $29 billion, Microsoft’s OpenAI wager is said to have increased to $13 billion. As OpenAI’s sole supplier of processing power, Microsoft’s Azure cloud servers benefit from the startup’s success and subsequent ventures.
The Battle for Generative AI Supremacy
Giants in the tech industry are competing to rule the generative AI space. Google has made up to $2 billion in investments in Anthropic, a business that develops potent AI models. Claude 3, the new model suite from Anthropic, is safety-focused and currently limited to analysing uploaded data. In contrast, Google’s AI picture generator was taken offline because of safety concerns.
There is competition to become the AI superpower, and huge tech corporations are coming under more scrutiny. Due to the restricted number of acquisitions, businesses are now making venture-style investments, as seen in Google’s partnership with Anthropic. This enables them to collaborate with bright AI companies and might give them an advantage in the cloud computing space.
Big Tech Doubles Down on AI Investment
According to another report by Pitchbook, the seven tech giants increased their investments in AI and machine learning to $24.6 billion last year from $4.4 billion in 2022. Big Tech’s M&A transactions decreased concurrently, from 40 in 2022 to 13 last year. Brendan Burke, an analyst at Pitchbook, stated that an incentive to invest in possible disruptors stems from a kind of paranoia. The other reason is to boost revenue and invest in businesses that are more likely to use the other company’s goods because these businesses are typically partners rather than rivals.
Strong collaborations between leading cloud providers and innovative developers are being fostered by Big Tech’s investments in AI companies. Together with bolstering the cloud infrastructure that these improvements depend on, our partnership fosters AI innovation. The FTC’s investigation guarantees ethical behaviour in these collaborations, enabling the full potential of AI innovations’ advantages to be realised.
