Amazon to invest up to $4 billion in AI startup Anthropic

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

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

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

But this development, the startup cautioned, will require a billion dollars in spending over the next 18 months. (Microsoft has invested as much as $11 billion in OpenAI over the years.)

In Amazon, Anthropic has found a deep-pocketed strategic investor that can also provide it with compute power to build future AI models and then find and help sell the offerings to scores of cloud customers.

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

Amazon believes it can help "improve many customer experiences, short and long-term, through our deeper collaboration" with Anthropic, said Andy Jassy, Amazon chief executive, in a statement.

“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.”

Anthropic -- which also counts Spark Capital, Salesforce, Sound Ventures, Menlo Ventures and Zoom among its backers -- has raised a total of $2.7 billion to date. The startup was valued at about $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 around AI, to build a bulkier war chest in the frantically fast-growing industry.

Image and Data: Goldman Sachs

Anthropic chief executive and co-founder Dario Amodei told the TechCrunch Disrupt audience last week that he doesn't see any barriers on the horizon for his company’s key technology.

“The last 10 years, there’s been this remarkable increase in the scale that we’ve used to train neural nets and we keep scaling them up, and they keep working better and better,” he said last week. “That’s the basis of my feeling that what we’re going to see in the next 2, 3, 4 years… what we see today is going to pale in comparison to that.”

Anthropic has made a "long-term" commitment to provide AWS customers around the world with access to future generations of its foundation models via Amazon Bedrock, AWS’s fully managed service that provides secure access to the industry’s top foundation models. In addition, Anthropic will provide AWS customers with early access to unique features for model customization and fine-tuning capabilities.

"Training state-of-the-art models requires extensive resources including compute power and research programs. Amazon’s investment and supply of AWS Trainium and Inferentia technology will ensure we’re equipped to continue advancing the frontier of AI safety and research," said Anthropic in a statement. "We look forward to working closely with Amazon to responsibly scale adoption of Claude and deliver safe AI cloud technologies to organizations around the world."