Amazon Meets its $4bn Funding Pledge into Anthropic

Amazon Meets its $4bn Funding Pledge into Anthropic

Amazon makes an additional $2.75 billion investment into Anthropic, further strengthening its ties with the AI firm in a race for dominance in the technology.

The deal is one of the many investment partnerships between some big tech firms and AI startups as they make big bets on AI, which is expected to give them a competitive edge. Amazon is also reportedly investing nearly $150 billion in data centers in anticipation of the AI boom.

Leveraging on generative AI

The $2.75 billion check or (€2.5 billion) brings it to a cumulative $4 billion the e-commerce giant promised. The company made an initial $1.24 billion into the AI startup.

This comes as Anthropic has been raising money from venture capitalists, and according to The Irish Times, the deals could equip the AI startup with billions of dollars in capital and credits to use computing services at a valuation of more than $18 billion.

Amazon indicated on Wednesday that it would be Anthropic’s “primary cloud provider” for key workloads running on Amazon Web Services (AWS).

“Generative AI is poised to be the most transformational technology of our time,” said Swami Sivasubramanian, vice president of data and AI at AWS, Amazon’s cloud computing subsidiary.

“We believe our strategic collaboration with Anthropic will further improve our customers’ experiences and look forward to whats next.”

Additionally, the AI startup will also use AI computer chips “developed in-house by Amazon.” It is also working with the -e-commerce giant to develop and enhance the hardware, with the aim of putting rivalry on Nvidia’s chips which are on high demand.

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Competition on OpenAI

According to The Irish Times, Anthropic is regarded as OpenAI’s most likely challenger putting pressure on ChatGPT.  Already, a Chatbot Arena ranking indicates that Anthropic’s Claude 3 Opus outperforms OpenAI’s GPT-4 on several industry benchmarks, as per users’ votes.

The company is also trading its shares at $30 each as part of initiatives to raise funds and computing credits to bankroll its cutting-edge AI models, according to informed people, aware of the deal.

Venture capitalists are also reportedly enthusiastic to commit about $750 million into Anthropic in a round expected to close in April. A significant amount of the total funding has been raised through a special purpose vehicle which was set up by Menlo Ventures – a Silicon Valley firm, which is an existing Anthropic investor, according to people with knowledge.

The Amazon’s deal comes despite some forensic scrutiny by regulators in the US, UK, and EU over deals between the big tech firms and the most prominent AI startups, which they argue may create uncompetitive risks. Other big tech firms like Microsoft has backed OpenAI with over $10 billion investment into the AI startup.

Amazon is however not stopping with the $4 billion into Anthropic, but is keeping eyes on the AI ball.

A decade and a half of AI investments

According to the Irish Examiner, Amazon is also looking at spending about $150 billion on data centers in the next 15 years.

The investment is seen as a sign the company wants to maintain hold on the cloud services “where it holds about twice the share of second player Microsoft.”

“We’re expanding capacity quite significantly,” said Kevin Miller, an AWS vice president who oversees the company’s data centers.

“I think that just gives us the ability to get closer to customers.”

The data center expansion is meant to meet the rise in demand for corporate services like file storage and databases.


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