Amazon Pumps $2.75Bn into Anthropic 

Six months ago, Amazon had a “me-too” moment when it announced its plans to tread the AI path, having seen arch rivals Google, Microsoft and Meta rush headlong into the alternative intelligence bandwagon. Now, the company has completed its $4 billion deal with Anthropic, a start-up that operates AI-powered text analyzing chatbot. 

The company had pumped in $1.15 billion for a minority stake in Anthropic six months ago, and is now exercising its option to hike the stake further. The company announced that it had invested a further $2.75 billion through the option it had left in September having invested initially for a minority stake in Anthropic and some agreements over AWS usage. 

Timed to perfection as Claude-3 just beat ChatGPT4

Of course, the timing couldn’t have been a coincidence as a couple of days ago, we read news about how Anthropic’s Claude-3 Opus large language model had surpassed OpenAI’s GPT4 that powers ChatGPT. This information was shared by Chatbot Arena, a popular and crowdsourced leaderboard used by AI researchers to gauge relative capabilities of LLMs. 

In fact, there was even a post on X (formerly twitter) by a software developer named Nick Dobos who wrote, “The king is dead” while “RIP GPT4” has also been trending on social media post this notification around Claude-3 Opus. Reports of this “upheaval” came up on ARS Technica and a few other websites that carry technology related news. 

This report noted that GPT4 was included in the Chatbot Arena on May 10 last year, barely days after the latter got launched. Variations of GPT4 consistently topped the charts until this point in time when Claude-3 got the better of it on the Arena. One of Anthropic’s smaller models, Haiku, has also been turning heads with its performance on the leaderboard, the report added. 

Makes sense for Amazon to dive in quickly 

Small wonder then that Amazon has quickly moved ahead to close the deal as this was one possible result that they could use to justify it. Else, those antagonistic to Jeff Bezos’ company might get away by claiming that there were no other horses on the AI or GenAI stables to back and Amazon’s hand was forced. 

While the company had time till the end of the first quarter to fulfil its commitment or decide to move away, Amazon seems to have gone right ahead and thrown in the maximum that it could at a technology that continues to find new use cases and generate discussions on its ability to be a gamechanger beyond our imagination. 

Amazon’s blog post starts off by noting that “the work Amazon and Anthropic are doing together to bring the most advanced generative artificial intelligence (generative AI) technologies to customers worldwide is only beginning.” It lists out areas of collaboration between the two as well as a partnership with Accenture to support banks. 

Startups are using Big Tech money and their fears

In the larger scheme of things across the AI landscape, startups have successfully lured big guns such as Amazon, Microsoft and even Google to some extent to invest the big billions in their ventures with a promise of changing the landscape across several use cases. Already, both Microsoft and Amazon have reaped the rewards of their investments.

Given the size of their war chests, it is not in the least surprising that these big tech giants have ploughed in cash into a sector that is yet to justify all the hype that got built post the announcement of ChatGPT by OpenAI in November 2022.  That large companies are pumping in big money is more in the form of a reaction of not being left empty when their rivals are backing one horse or the other. 

Already Amazon’s finance whizkids would be smiling from ear-to-ear as it is obvious that the money the company ploughed into Anthropic was based on valuations last September. And this number is certainly lower than what it is today. Of course, we are not privy to both these sets of numbers, but knowing how the PE/VC community operates, we’re bound to be right on both counts. 

What we can also commit to safely is that every AI-led venture has a plan. Be it Anthropic or Amazon, OpenAI or Microsoft, Gemini and Google – the challenge now is to see how much of this hype actually turns into substance and what ends up remaining a hyperbole. For the moment, this is a question even the smartest AI-led chatbot cannot answer!