Amazon spends $2.75 billion on AI startup Anthropic in its largest venture investment yet

Amazon is investing significantly to back Anthropic, an artificial intelligence startup, in a move to maintain its competitive edge in the rapidly evolving field of AI.

This move is part of a broader spending spree among cloud providers like Amazon Web Services (AWS) as they race to remain at the forefront of the AI revolution.

Anthropic’s AI models, including its chatbot Claude, are seen as strong competitors to OpenAI’s popular ChatGPT.

By investing in the startup, Amazon aims to gain strategic advantages in both the enterprise and consumer spaces, where generative AI is poised to transform various industries.

Amazon’s partnership with Anthropic includes the use of AWS as Anthropic’s primary cloud provider, as well as Amazon chips for training and deploying its AI models.

This move underscores the symbiotic nature of such collaborations, where cloud providers benefit from increased usage of their services, while AI startups gain access to essential resources and infrastructure.

This investment is the largest venture bet Amazon has made in its history, surpassing its previous investment in electric vehicle maker Rivian.

It represents a shift towards venture-style investing, with a drop in M&A deals and an increase in partnerships, amidst antitrust scrutiny targeting Big Tech companies.

However, there are also concerns raised about potential conflicts of interest and round tripping, where cloud providers invest in AI startups that may indirectly drive revenue back to their own cloud businesses.

The U.S. Federal Trade Commission is scrutinizing these partnerships, highlighting the need for transparency and ethical considerations in such arrangements.