Amazon announced on Monday (25 Sept) that it will invest up to $4bn in artificial intelligence (AI) start-up Anthropic, in a push to compete with Microsoft and Google’s AI advancements.

The CEOs of Amazon and Anthropic confirmed the deal will see an immediate investment of $1.25bn, with both parties retaining the option to increase the total by a further $2.75bn.

As part of the deal, Anthropic will primarily rely on Amazon’s cloud computing and AI chips which will be used to train its language models. Likewise, Amazon’s employees and cloud customers will have access to Anthropic’ s technology in their businesses.

The start-up, valued at over $4bn earlier this year, is one of ChatGPT maker OpenAI’s top competitors. For Amazon, the agreement is a bid to rival Microsoft and Google’s expansion into AI tools and products following the massive success of ChatGPT’s release in November 2022.

Google invested in Anthropic’s $450m funding round in May 2023 while Microsoft has heavily invested in ChatGPT.

Amazon’s investment, however, is not an exclusive agreement. Anthropic’s co-founder Dario Amodei said in an interview that “nothing has changed” in its relationship with Google.

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Founded in 2021, Anthropic was created by former OpenAI employees, siblings Daniela Amodei and Dario Amodei, who split from the company over differences regarding OpenAI’s ventures with Microsoft in 2019.

Anthropic’s own AI chatbot, Claude, allows users to submit questions or requests and receive relevant responses. Claude 2 was launched in July for users in the US and the UK.

Why it matters

On the deal’s rationale, GlobalData analyst Josep Bori said: “Amazon’s push in generative AI is not surprising when this is becoming a factor of competitive differentiation between public cloud providers and a key driver of IT spending.”

Big Tech competitor Alphabet has had its own long-time organic AI investments in its Google Brain team and its acquisition of AI subsidiary, DeepMind, in 2014. Microsoft has also focused heavily on AI through its investment and partnership with OpenAI. “Amazon was lacking in this area, so this deal makes a lot of sense,” according to Bori.

Bori also notes that many of these Big Tech AI investments involve the AI vendors prioritising the cloud infrastructure of the investing company for the running of the large language models.

“Given the massive consumption of computing resources of these models, one would think they will pay by themselves pretty quickly no matter what,” adds Bori.

GlobalData predicts the overall global AI market will be valued at over $984m by 2030 growing at a compound annual growth rate 36.5% based on actual and predicted market size from 2019-2030.

Our signals coverage is powered by GlobalData’s Thematic Engine, which tags millions of data items across six alternative datasets — patents, jobs, deals, company filings, social media mentions and news — to themes, sectors and companies. These signals enhance our predictive capabilities, helping us to identify the most disruptive threats across each of the sectors we cover and the companies best placed to succeed.