Amazon is making its largest outside investment in its three-decade history as it looks to gain an edge in the artificial intelligence race, according to CNBC.
TakeAway Points:
- Amazon is investing billions in supporting artificial intelligence startups.
- The tech and cloud giant said it would spend another $2.75 billion backing Anthropic, adding to its initial $1.25 billion check.
- Cloud providers are going all out to keep ahead of what is thought to be a new technological revolution, and this is just the latest in their spending spree.
Amazon invests in AI startups
The internet behemoth said that it would invest an additional $2.75 billion in Anthropic, a San Francisco-based business that is considered a leader in the field of generative artificial intelligence. OpenAI and ChatGPT are competitors of its foundation model and chatbot, Claude.
In September, the firms declared their first investment of $1.25 billion, with Amazon committing to contribute up to $4 billion at that time. The announcement on Wednesday represents the second funding round for Amazon.
The company stated that Amazon will continue to own a minority position in the business and will not have a seat on the Anthropic board. According to a source, the agreement was reached at the AI startup’s previous valuation of $18.4 billion.
Anthropic has concluded five investment rounds totaling approximately $7.3 billion in the last year. The company was created by former research executives and workers of OpenAI, and its product is a direct competitor of OpenAI’s ChatGPT in both the enterprise and consumer markets.
Amazon Investment and Claude 3
The announcement of the Amazon investment comes a few weeks after Anthropic unveiled Claude 3, its most recent set of AI models, which the company claims to be its quickest and most potent yet. The most proficient of the company’s new models, according to industry standard tests including bachelor level understanding, graduate level reasoning, and fundamental mathematics, outperformed Google’s Gemini Ultra and OpenAI’s GPT-4.
“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. We look forward to what’s next,” said Swami Sivasubramanian, vice president of data and AI at AWS cloud provider.
Amazon’s move is the latest in a spending blitz among cloud providers to stay ahead in the AI race. Additionally, this is Anthropic’s second capital structure update in as many weeks. Late Friday, bankruptcy documents showed crypto exchange FTX negotiated a deal with a group of buyers to sell the majority of its share in Anthropic, corroborating a CNBC report from last week.
Microsoft has been spending heavily on its own, as evidenced by its high-profile investment in OpenAI, which is said to have increased to $13 billion as the startup’s valuation surpassed $29 billion. In addition, Microsoft’s Azure serves as OpenAI’s exclusive source of computing power, meaning that any success the company achieves and new business it generates will ultimately benefit Microsoft’s cloud servers.
Meanwhile, Google has backed Anthropic with its own deal for Google Cloud, agreeing to invest up to $2 billion in the company, including $500 million in cash infusion and an additional $1.5 billion to be invested over time. Salesforce has also backed Anthropic.
Anthropic
Anthropic has introduced “multimodality,” or the ability to add features like photo and video capabilities to generative AI, for the first time with its new model suite, which was unveiled earlier this month.
Multimodality and more sophisticated AI models do, however, also increase the potential hazards. After consumers found historical errors and dubious responses, which went viral on social media, Google recently removed its AI picture generator—a component of its Gemini chatbot—offline.
