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Amazon's $4B investment in Anthropic fuels GenAI race

This makes the tech giant Anthropic's primary cloud provider. This arrangement is different from Google's investment in the AI startup and Microsoft's investment in OpenAI.

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Amazon on Monday said it will invest up to $4 billion in generative AI startup Anthropic as part of a collaboration to develop high-performing foundation models.

The move highlights the fast-expanding role of the tech giants in the wave of generative AI sweeping the tech world.

The agreement

The investment means AWS will become Anthropic's primary cloud provider for significant workloads. The AI startup will also have access to AWS compute infrastructure through AWS Trainium and Inferentia chips.

In return, Anthropic will expand its support for its AI assistant Claude 2 on Amazon Bedrock. Bedrock is AWS' managed service for multimodal foundation models from the tech vendor and other AI startups.

The investment will come in the form of both money and cloud credits, which gives Anthropic the chance to use a certain amount of AWS compute and storage.

Amazon's investment into the AI startup comes less than two months after Anthropic revealed a $100 million investment from telecommunications giant SK Telecom, based in South Korea.

Amazon's bet

Amazon's investment shows that the cloud provider is placing a generative AI bet on Anthropic similar to what Microsoft has done with ChatGPT creator OpenAI starting in 2019, according to S&P Global Market Intelligence analyst Nick Patience.

However, the difference is that their partnership is not exclusive, which gives Anthropic the freedom to use other cloud providers.

It is very much this kind of placing a bet, [with Amazon] thinking it needs to have some control to a certain extent over how these foundation models are built and deployed.
Nick PatienceAnalyst, S&P Global Market Intelligence

"It is very much this kind of placing a bet, thinking it needs to have some control to a certain extent over how these foundation models are built and deployed," Patience said.

It's also Amazon's way of showing it is not behind in the generative AI race, said Jim Hare, an analyst at Gartner.

"Amazon benefits from a model provider building and running large models with extreme amounts of parameters that will be a technology showcase of their GenAI managed service, Bedrock, and their AI custom chips," Hare said.

The partnership will also enable Anthropic to advance the capabilities of AWS' Trainium and Inferentia chips.

The focus on the chips is interesting, especially as AI chipmaker and software developer Nvidia continues to dominate the AI chip market, Patience said.

"AWS and Google are very focused on designing their own silicon and making it highly optimized for models," he said. "They are actually going to eventually -- not now -- go head to head with Nvidia in these kinds of markets."

The investment also enables AWS to benefit from technologies spun off from Anthropic's relationship with other investors, said Mary Jander, an analyst at Futuriom.

"They have the advantage of having Anthropic work on their components and also work with various products that Amazon has, [such as] search engines and other products that they have, that they can use Anthropic technology for," Jander said. "I think it's really been a coup for them."

Anthropic's challenge

However, a possible challenge for Anthropic is that its relationship with Amazon could mean alienating other investors such as Google, even though Anthropic's partnership with AWS is not exclusive, Hare said.

AWS is not the only cloud provider that has invested in Anthropic.

Google has also pumped about $300 million into Anthropic. But that financial commitment to the AI startup wasn't as extensive as Amazon's, Jander pointed out.

"The initial agreement with Anthropic and Google was that Anthropic would benefit from Google's machine learning," she said. "With AWS, it goes beyond that to foundation models and a little more direct involvement with the chips and the technology."

AWS tends to be assertive in its relationships with close partners, posing a risk to Anthropic, Jander continued.

"AWS has really been very proprietary about its cloud services," she said. "They don't play nice with others. I think that Anthropic will be subject to the whims of AWS. They're going to have a struggle to maintain their independence."

A different requirement

These kinds of partnerships reflect a shift in the relationship between large and small vendors. Previously, it was common for big tech companies to acquire smaller ones rather than simply team up with or invest in them.

However, the partnerships between Anthropic and AWS and Google, Cohere and Oracle, and OpenAI and Microsoft show that generative AI requires different components.

"You need components, foundation models, and these startups have very specific expertise," Jander said. "Nobody is going to be able to dominate."

Esther Ajao is a TechTarget Editorial news writer covering artificial intelligence software and systems.

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