Amazon to Compete in the AI Race With up to a $4 Billion Investment in Anthropic

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To compete with its cloud rivals, Amazon on Monday, 25th September announced a new investment deal. The eCommerce giant is investing up to $4 billion in a renowned startup Anthropic. As a part of the deal, Amazon employees and cloud customers will gain early access to the technology from Anthropic that they can use.
Anthropic, the San Francisco-based startup also committed to leaning on Amazon’s cloud services. This includes training the future AI models on large quantities of proprietary chips it would buy from the tech and computing giant.
The CEOs of Amazon’s cloud division and Anthropic announced in a joint interview that the immediate investment will be $1.25 billion. Also, either party will have the authority to trigger another $2.75 billion in funding by Amazon.
Both the companies declined to state how much ownership Amazon has in Anthropic or the startup’s latest valuation which was last estimated at $4 billion. Amazon however confirmed that it will not earn a seat on the board and that its stake amounted to a minority position.

The Motive of the Amazon-Anthropic Deal

With this agreement, Anthropic will use AWS Trainium and Inferentia chips to build, train, and deploy its future AI models. With it, they can benefit from the price, performance, scale, and security of AWS. The two companies are also partnering for the development of future Trainium and Inferentia technology.
AWS will also become the primary cloud provider for complex workloads including safety research and future foundation model development. Anthropic also plans to run a substantial workload using AWS cloud computing solutions.
Anthropic is also committing to AWS customers to provide access to the future generations of its foundation models. They will do that via Amazon Bedrock, AWS’s fully managed service for secure access to the industry’s top foundation models.
“We have tremendous respect for Anthropic’s team and foundation models, and believe we can help improve many customer experiences, short and long-term, through our deeper collaboration,” said Andy Jassy, Amazon CEO. “Customers are quite excited about Amazon Bedrock, AWS’s new managed service that enables companies to use various foundation models to build generative AI applications on top of, as well as AWS Trainium, AWS’s AI training chip, and our collaboration with Anthropic should help customers get even more value from these two capabilities.”

Tech Giants Hopping on the AI Hype Train

Amazon’s rivals Microsoft and Google brought significant development in AI this year. Microsoft is working with OpenAI to support its Bing AI Chatbot. Google just announced the AI tool Genesis alongside its primary Chatbot Bard.
With its rivals already in the AI game, Amazon had to step in with something. This deal also shows the current approach of cloud companies to secure ties with AI startups transforming their industry. How exactly this deal benefits Amazon is yet to be seen.
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