Amazon to Invest $4 Billion in Anthropic to Boost AI Capabilities

San Francisco, Sept 25 (Reuters) – Amazon.com (AMZN.O) announced on Monday its plan to invest up to $4 billion in cash in the high-profile startup Anthropic, as a strategic move to compete with growing cloud rivals in the field of artificial intelligence (AI). By partnering with Anthropic, Amazon aims to provide its employees and cloud customers with early access to cutting-edge AI technology that they can integrate into their businesses. Additionally, Anthropic has committed to primarily utilizing Amazon’s cloud services, including training AI models using proprietary chips supplied by the e-commerce giant.

In a joint interview, the CEOs of Amazon’s cloud division and Anthropic revealed that the initial investment would be $1.25 billion and either party has the option to trigger an additional $2.75 billion in funding from Amazon. The exact ownership percentage acquired by Amazon and the updated valuation of Anthropic have not been disclosed. Amazon clarified that it would not gain a board seat and the investment would result in a minority position for the company.

This move by Amazon marks its strongest response to date in addressing the challenges posed by other cloud rivals such as Microsoft (MSFT.O) and Alphabet’s (GOOGL.O) Google, who have made significant advancements in AI capabilities. The deal also exemplifies the ongoing competition within the cloud industry to secure partnerships with AI startups that are reshaping the sector.

Microsoft, for instance, has invested billions of dollars in its partnership with OpenAI, the creator of ChatGPT, to provide exclusive access to the startup’s advanced technology to its customers. Similarly, Google has been a pioneering force in AI and recently invested in Anthropic’s $450 million funding round. Amazon’s collaboration with Anthropic is expected to drive increased demand for AI-powered applications, including the development of chips specifically designed for AI technology like Trainium and Inferentia.

Commenting on the partnership, Adam Selipsky, CEO of Amazon Web Services, stated, “This alliance will enhance Anthropic’s models and further improve our chip technology and AI infrastructure.” Dario Amodei, CEO of Anthropic, expressed his appreciation for the financing agreement, emphasizing that it would enable the company to prioritize safety while scaling up its AI models.

Despite the collaboration with Amazon, Anthropic will continue its existing agreement with Google. The startup will utilize Google’s custom chips and make its technology available through Google Cloud and other platforms. Concurrently, Anthropic’s involvement in the Amazon partnership will contribute to the success of Amazon Bedrock, a service that attracts users interested in building AI applications.

Under the agreement, Amazon customers will gain early access to Anthropic’s features, allowing them to customize their AI capabilities. Selipsky emphasized the importance of the collaboration, stating, “Both companies are committed to ensuring that future versions of Claude, Anthropic’s AI model, will be available on Amazon Bedrock for many years to come.”

Anthropic’s Claude 2 is a highly sophisticated AI model capable of analyzing extensive business or legal documents. Through the partnership, Anthropic aims to drive enterprise usage for Claude. Notable companies currently collaborating with Anthropic and Amazon include LexisNexis, Bridgewater Associates, and Lonely Planet.

While Anthropic is not as widely recognized as OpenAI, the startup behind the renowned GPT-4 model, Amazon’s objective is to offer customers a diverse range of AI models to eliminate the need for seeking cloud services elsewhere. As for future investments in AI startups, Selipsky acknowledged that Amazon’s plans were uncertain.

Reporting by Jeffrey Dastin in San Francisco; Editing by Kenneth Li and Chizu Nomiyama

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