Amazon Invests Up To $4 Billion In AI Startup Anthropic

Photo credit: Anthropocene

Amazon has agreed to invest up to $4 billion in AI startup Anthropic, the two companies said, as the e-commerce group intensifies its rivalry with Microsoft, Meta, Google and Nvidia in the fast-growing sector which many technologists believe could be the next great frontier.

The e-commerce group said it would initially invest $1.25 billion in a minority stake in Anthropic, which, like Google’s Bard and Microsoft-backed OpenAI, also operates an AI-powered text analysis chatbot. As part of the agreement, Amazon said it had the option to increase its investment in Anthropic to a total of $4 billion.

TechCrunch exclusively reported earlier this year that Anthropic, which also counts Google as an investor, plans to raise up to $5 billion over the next two years. Anthropic, which launched its first consumer-focused premium subscription to chatbot Claude 2 earlier this month, plans to build a “frontier model” – tentatively called “Claude-Next” – that is 10 times more powerful than today’s most powerful AI at one 2023 investor deck obtained by TechCrunch earlier this year.

But that development, the startup warned, will require $1 billion in spending over the next 18 months. (Microsoft has invested up to $11 billion in OpenAI over the years.)

With Amazon, Anthropic has found a wealthy strategic investor who can also provide it with computing power to build future AI models and then find the offers and help sell them to numerous cloud customers.

As part of the investment agreement, Anthropic will use Amazon’s cloud giant AWS as its primary cloud provider for mission-critical workloads, including security research and future foundational model development, the e-commerce group said. Anthropic will also use AWS Trainium and Inferentia chips to build, train and deploy its future base models. (Anthropic has been an AWS customer since 2021.)

Amazon believes that through our deeper collaboration with Anthropic, it can help “improve many customer experiences in the short and long term,” Amazon CEO Andy Jassy said in a statement.

“Customers are very excited about Amazon Bedrock, AWS’s new managed service that enables companies to use various base models to build generative AI applications on top of them, as well as AWS Trainium, AWS’s AI training chip, and Our collaboration with Anthropic should help customers get even more benefit from both of these capabilities.”

Anthropic – whose backers also include Spark Capital, Salesforce, Sound Ventures, Menlo Ventures and Zoom – has raised a total of $2.7 billion to date. The startup was valued at around $5 billion in May this year when it secured $450 million in a funding round. It didn’t say how Amazon valued Anthropic in the new investment.

The deal with Anthropic allows Amazon, which is increasingly flexing its own muscles in AI, to build a larger force in the rapidly growing industry.

Image and data: Goldman Sachs

Dario Amodei, CEO and co-founder of Anthropic, told the TechCrunch Disrupt audience last week that he sees no obstacles to his company’s key technology.

“Over the last decade, the scale at which we use to train neural networks has increased remarkably, and we continue to scale them and they work better and better,” he said last week. “That’s the basis of my feeling that what we’re going to see in the next two, three, four years… will pale in comparison.”

Anthropic has a “long-term” commitment to providing AWS customers around the world with access to future generations of its endowment models through Amazon Bedrock, AWS’s fully managed service that provides secure access to the industry’s best endowment models. Additionally, Anthropic provides AWS customers with early access to unique model customization and tuning capabilities.

“Training state-of-the-art models requires extensive resources, including computing power and research programs. “Amazon’s investment and delivery of AWS Trainium and Inferentia technology will ensure we are equipped to further advance the frontiers of AI security and research,” Anthropic said in a statement. “We look forward to working closely with Amazon to responsibly expand Claude adoption and deliver secure AI cloud technologies to businesses around the world.”