Amazon\u00a0is making its largest outside investment in its three-decade history as it looks to gain an edge in the\u00a0artificial intelligence\u00a0race.\u00a0<\/p>\n
The tech giant said it will spend another $2.75 billion backing\u00a0Anthropic, a San Francisco-based startup that\u2019s widely viewed as a front-runner in generative artificial intelligence. Its foundation model and chatbot Claude competes with\u00a0OpenAI\u00a0and ChatGPT.<\/p>\n
The companies announced an\u00a0initial $1.25 billion investment\u00a0in September, and said at the time that Amazon would invest up to $4 billion. Wednesday\u2019s news marks Amazon\u2019s second tranche of that funding.<\/p>\n
Amazon will maintain a minority stake in the company and won\u2019t have an Anthropic board seat, the company said. The deal was struck at the AI startup\u2019s last valuation,\u00a0which was $18.4 billion, according to a source.\u00a0<\/p>\n
Over the past year, Anthropic closed five different funding deals worth about $7.3 billion. The company\u2019s product directly competes with OpenAI\u2019s ChatGPT in both the enterprise and consumer worlds, and it was founded by ex-OpenAI research executives and employees.<\/p>\n
News of the Amazon investment comes weeks after Anthropic\u00a0debuted 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\u2019s GPT-4 and\u00a0Google\u2019s Gemini Ultra on industry benchmark tests, such as undergraduate level knowledge, graduate level reasoning and basic mathematics.<\/p>\n
\u201cGenerative 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\u2019 experiences, and look forward to what\u2019s next,\u201d said\u00a0Swami Sivasubramanian, vice president of data and AI at AWS cloud provider.<\/p>\n
Amazon\u2019s move is the latest in a spending blitz among cloud providers to stay ahead in the AI race.\u00a0And it\u2019s the second update in a week to Anthropic\u2019s 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\u00a0Anthropic, confirming a CNBC\u00a0report\u00a0from last week.<\/p>\n
The term generative AI entered the mainstream and business vernacular seemingly overnight, and the field has exploded over the past year, with a record $29.1 billion invested across nearly 700 deals in 2023, according to PitchBook. OpenAI\u2019s ChatGPT first showcased the tech\u2019s ability to produce human-like language and creative content in late 2022. Since then, OpenAI has said\u00a0more than 92%\u00a0of Fortune 500 companies have adopted the platform, spanning industries such as financial services, legal applications and education.<\/p>\n
Cloud providers like Amazon Web Services don\u2019t want to be caught flat-footed.<\/p>\n
It\u2019s 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\u00a0Nvidia.\u00a0<\/p>\n
Microsoft\u00a0has been on its own spending spree with a high-profile investment in OpenAI. Microsoft\u2019s OpenAI bet has reportedly jumped to\u00a0$13 billion\u00a0as the startup\u2019s valuation has topped $29 billion. Microsoft\u2019s Azure is also OpenAI\u2019s exclusive provider for computing power, which means the startup\u2019s success and new business flows\u00a0back\u00a0to Microsoft\u2019s cloud servers.<\/p>\n
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.<\/p>\n
Anthropic\u2019s new model suite, announced earlier this month, marks the first time the company has offered \u201cmultimodality,\u201d or adding options like photo and video capabilities to generative AI.<\/p>\n
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\u00a0after users discovered\u00a0historical inaccuracies\u00a0and questionable responses, which circulated widely on social media.<\/p>\n
Anthropic\u2019s Claude 3 does not generate images. Instead, it only allows users to upload images and other documents for analysis.<\/p>\n
\u201cOf course no model is perfect, and I think that\u2019s a very important thing to say upfront,\u201d Anthropic co-founder Daniela Amodei told CNBC\u00a0earlier this month. \u201cWe\u2019ve tried very diligently to make these models the intersection of as capable and as safe as possible. Of course there are going to be places where the model still makes something up from time to time.\u201d<\/p>\n
Amazon\u2019s biggest venture bet before Anthropic was electric vehicle maker\u00a0Rivian, where it invested more than $1.3 billion. That too, was a strategic partnership.\u00a0<\/p>\n
These partnerships have been picking up in the face of more antitrust scrutiny. A drop in acquisitions by the Magnificent Seven \u2014 Amazon, Microsoft,\u00a0Apple, Nvidia, Alphabet,\u00a0Meta\u00a0and\u00a0Tesla\u00a0\u2014 has been offset by an increase in venture-style investing, according to Pitchbook.<\/p>\n
AI and machine-learning investments from those seven tech companies jumped to $24.6 billion last year, up from $4.4 billion in 2022, according to Pitchbook. At the same time, Big Tech\u2019s M&A deals fell from 40 deals in 2022 to 13 last year.\u00a0<\/p>\n
\u201cThere is a sort of paranoia motivation to invest in potential disruptors,\u201d Pitchbook AI analyst Brendan Burke said in an interview. \u201cThe other motivation is to increase sales, and to invest in companies that are likely to use the other company\u2019s product \u2014 they tend to be partners, more so than competitors.\u201d<\/p>\n
Big Tech\u2019s spending spree in AI has come under fire for the seemingly circular nature of these agreements. By investing in AI startups, some observers, including Benchmark\u2019s Bill Gurley, have accused the tech giants of funneling cash back to their cloud businesses, which in turn, may show up as revenue. Gurley\u00a0described\u00a0it as a way to \u201cgoose your own revenues.\u201d<\/p>\n
The U.S. Federal Trade Commission is taking a closer look at these partnerships, including Microsoft\u2019s OpenAI deal and Google and Amazon\u2019s Anthropic investments. What\u2019s sometimes called \u201cround tripping\u201d can be illegal \u2014 especially if the aim is to mislead investors. But Amazon has said that this type of venture investing does not constitute round tripping.<\/p>\n
FTC Chair Lina Khan\u00a0announced the inquiry\u00a0during the agency\u2019s tech summit on AI, describing it as a \u201cmarket inquiry into the investments and partnerships being formed between AI developers and major cloud service providers.\u201d<\/p>\n<\/p>\n
Amazon\u00a0is making its largest outside investment in its three-decade history as it looks to gain an edge in the\u00a0artificial intelligence\u00a0race.\u00a0 The tech giant said it will spend another $2.75 billion backing\u00a0Anthropic, a San Francisco-based startup that\u2019s widely viewed as a front-runner in generative artificial intelligence. Its foundation model and chatbot Claude competes with\u00a0OpenAI\u00a0and ChatGPT. The […]<\/p>\n","protected":false},"author":0,"featured_media":2524,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-2523","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/2523","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=2523"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/2523\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/2524"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=2523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=2523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=2523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}