Amazon and Anthropic partner with a $4B deal

Amazon is making a big investment in AI startup Anthropic, heating up the rivalry with other tech giants in this fast-growing field. Amazon said that as part of the deal Anthropic would be using its custom chips to build and deploy its AI software. Amazon also agreed to incorporate Anthropic’s technology into products across its business.

What's going on here?

Anthropic, an AI startup, is partnering with Amazon in a deal where Amazon will invest up to $4 billion.

What does this mean?

The partnership will allow Anthropic to leverage Amazon's cloud computing resources to further develop its AI assistant Claude. In return, Amazon gains strategic access to Anthropic's Claude, and AWS customers get early access to Claude capabilities.

Amazon will start by investing $1.5B to acquire a stake in Anthropic which could grow up to $4B. The valuation for this deal is not known. In contrast, Google’s last investment in Anthropic (May 2023) was $300M valuing it at $5B.

Why should I care?

Google is an investor in Anthropic, and it was being seen as a partnership mimicking Microsoft and Open AI’s deal. But this deal with Amazon makes AWS the primary cloud partner for Anthropic. Google’s Vertex AI still doesn’t have Cluade available, and now Amazon Bedrock will. This indicates that Google's plan for leveraging Anthropic’s partnership to pull ahead in the AI race might not be working.

At the same time, Amazon has had a lukewarm reaction to its generative AI products. It’s soon going to add gen AI to Alexa with new and advanced models. Partnering with Anthropic and access to Claude could be good news for its other products as well, not just AWS.