Amazon to invest $4 billion in generative AI startup Anthropic as AI race heats up

Just a month after raising $100 million from South Korea’s SK Telecom to take on ChatGPT, Anthropic, an AI startup backed by Google,  has attracted the attention of Amazon.com with blockbuster investment. Amazon announced on Monday that it is investing up to $4 billion in Anthropic as part of the effort to maintain its competitiveness in the rapidly growing cloud market dedicated to artificial intelligence (AI).

This strategic move will grant Amazon’s employees and cloud customers early access to Anthropic’s cutting-edge technology, offering them the opportunity to integrate these advancements into their own businesses. Additionally, Anthropic, headquartered in San Francisco, has pledged to predominantly utilize Amazon’s cloud services. This includes the training of its forthcoming AI models using a significant volume of proprietary chips procured from the e-commerce and computing titan.

In a joint interview, the CEOs of Amazon’s cloud division and Anthropic disclosed that the initial investment in this partnership amounts to $1.25 billion, Reuters reported. Additionally, either party holds the authority to activate an additional $2.75 billion in funding provided by Amazon. Specifics regarding Amazon’s ownership stake in Anthropic and the startup’s revised valuation, which was previously estimated to exceed $4 billion, were not disclosed. Amazon clarified that it will not acquire a board seat and that its share in Anthropic represents a minority position.

The investment also signifies a significant move by Amazon to address the competitive challenges posed by Microsoft and Alphabet’s Google, both of which have made strides in the development and promotion of powerful AI capabilities this year. It also underscores the ongoing efforts of cloud companies to establish strong connections with AI startups that are reshaping the industry landscape.

Since 2019, Microsoft has invested substantial sums into its partnership with OpenAI, the creator of ChatGPT. This strategic collaboration has granted Microsoft’s customers exclusive access to OpenAI’s advanced technology for text generation and image creation.

Anthropic came into the spotlight following the popularity of ChatGPT. Now Anthropic team has just released its own chatbot to take on ChatGPT, the popular chatbot developed by their former employer.

The popularity of OpenAI ChatGPT has now led to a boom in the adoption of generative artificial intelligence (AI) and big tech companies and small startups alike are in a race to integrate it into their products. Since its launch in November, ChatGPT has impressed many experts with its writing ability, software coding, proficiency in handling complex tasks, and its ease of use.

In May 2021, the startup raised $124 million in funding from high-profile investors led by Skype co-founder Jaan Tallinn, with participation from former Google CEO Eric Schmidt, James McClave, Dustin Moskovitz, and the Center for Emerging Risk Research, among others.

Anthropic was founded in 2021 by OpenAI’s former VP of research Dario Amodei (CEO), Jack Clark, Sam McCandlish, and Tom Brown. Sensing that generative artificial intelligence is going to have a major impact on the world, Dario struck out with his sister Daniela to create “large-scale AI systems that are steerable, interpretable, and robust.” Before co-founding Anthropic, Daniela Amodei was OpenAI’s vice president of safety and policy.

Anthropic is working to build reliable, interpretable, and steerable AI systems. For now, the startup is primarily focusing on research towards these goals; down the road, we foresee many opportunities for our work to create value commercially and for public benefit, the company said on its website.

“This is definitely a big deal in the generative AI space,” said Ali Javaheri, an associate research analyst at PitchBook. It “shows that OpenAI is not the only player in the game, that it’s still a very competitive space,” he said.

In a blog post, Anthropic said: “Our team is focused on AI alignment techniques that allow AI systems to better handle adversarial conversations, follow precise instructions, and generally be more transparent about their behaviors and limitations.