Why Amazon has pumped $2.75 billion into AI start-up Anthropic
What's the story
In a significant development, Amazon has invested an additional $2.75 billion in San Francisco-based start-up Anthropic, known for its work in generative artificial intelligence.
This follows Amazon's initial investment of $1.25 billion in September, bringing the total investment to $4 billion.
The transaction was based on Anthropic's latest valuation of $18.4 billion, and allows Amazon to maintain a minority stake without board representation.
Superiority
Anthropic's AI models outperform industry competitors
Anthropic, founded by former OpenAI research leaders, has raised approximately $7.3 billion in multiple funding rounds over the past year.
The start-up's product competes directly with OpenAI's ChatGPT in both business and consumer sectors.
Recently, Anthropic introduced Claude 3, its latest suite of AI models that it claims are its fastest and most powerful yet.
According to the company, these new models outperformed OpenAI's GPT-4 and Google's Gemini Ultra in industry-standard tests.
Strategic partnership
Amazon's investment reflects broader trend in AI landscape
Swami Sivasubramanian, Vice President of Data and AI at AWS Cloud, stated, "Generative AI is set to be the most transformative technology of our era, and we believe our strategic partnership with Anthropic will further enhance our customers' experiences."
As part of its agreement with Amazon, Anthropic will use AWS as its primary cloud provider, and will utilize Amazon chips for training, building, and deploying its foundational models.
AI evolution
Anthropic expands AI capabilities with multimodal features
Earlier this month, Anthropic announced a new suite of models, marking the company's first venture into "multimodality," or the addition of features like photo and video capabilities to generative AI.
Unlike Google's Gemini chatbot, Anthropic's Claude 3 doesn't generate images, but allows users to upload pictures and other documents for analysis.
Daniela Amodei, Co-founder of Anthropic, emphasized the importance of acknowledging that "no model is perfect" and that they've worked diligently to balance capability and safety.
Up
AI investments surge amid antitrust scrutiny
Before Anthropic, Amazon's most significant venture investment was in electric vehicle manufacturer Rivian, where it invested over $1.3 billion.
These partnerships have been increasing amid growing antitrust scrutiny.
Last year, AI and machine-learning investments from seven tech giants jumped to $24.6 billion, a substantial increase from $4.4 billion in 2022.
Brendan Burke, a Pitchbook AI analyst, noted that there's a "fear-driven motivation to invest in potential disruptors" and to boost sales by investing in companies likely to use their products.