Amazon on Wednesday invested an additional $2.75 billion in growing AI powerhouse Anthropic, taking over the option it left in September last year. I wonder if the $1.25 billion he invested at the time is paying off, or if he realizes he doesn't have any other horses to back it up.
The September deal invested $1.25 billion in the company in exchange for a minority stake and certain retaliation deals, such as Anthropic, to continue using AWS for a wide range of computing needs.
Amazon reportedly had until the end of the first quarter to decide whether to increase its investment by up to $4 billion; We have decided.
Anthropic's AI model is one of the few that competes at the highest level of functionality (however you define it) and is available at scale for enterprises to deploy in internal or user-facing applications. OpenAI's GPT series and Google's Gemini are among the top companies, but startups like Mistral could soon threaten this fragile triumvirate.
Lacking the ability to develop suitable models in-house for some reason, companies such as Amazon and Microsoft have had to act on their behalf, primarily through other companies such as OpenAI and Anthropic. Both companies have reaped untold benefits from forming alliances with either of their deep-pocketed rivals, but so far there haven't been many downsides.
After looking pretty closely at how AI sausages are manufactured (one has to assume), the gains from Amazon's decision to invest as much as possible are actually pretty meager.
It makes strategic sense for these companies, who have vast war chests set aside for this very purpose (outperforming the competition when they cannot out-innovate), to pour cash into the AI space. makes sense. Currently, the world of AI is like a roulette table, with OpenAI and Anthropic representing the black and red. No one knows where the ball will land. Especially companies that couldn't have predicted or created this technology themselves. But if your opponent puts chips on red, it makes sense to bet on black.
Amazon has a lot to gain here, especially if you can bet on black at a discounted price. This is because you can invest at Anthropic's September valuation, which is definitely lower than it is now.
That said, if things looked sketchy and how they must have looked at Inflection before Microsoft jumped on it, Amazon either backed out or paid the full additional $2.75 billion. I might have just made a lower investment. But it may have sent a confusing signal that no one, especially the existing multibillion-dollar investors, wanted to stay out of it.
We know Anthropic has plans, but this year we wonder what Amazon, Apple, Microsoft, and other multinationals think they can do to monetize this supposedly revolutionary technology. will become clear.