Amazon announced on Monday a substantial investment of $4 billion in San Francisco-based AI company Anthropic. This development mirrors Microsoft’s (MSFT) $10 billion investment in OpenAI, the creators of ChatGPT, placing Amazon at the forefront of the AI revolution that is reshaping Silicon Valley and its technological landscape.
Established in 2021 by former employees of OpenAI, Anthropic is dedicated to constructing secure and dependable AI systems. However, Amazon’s engagement with Anthropic extends beyond financial backing; it signifies a dual-purpose initiative. Firstly, to heighten competition against rivals Microsoft and Alphabet, the parent company of Google, within the cloud industry. Secondly, to integrate generative AI into its Amazon.com platform.
According to Gene Munster, Managing Partner at Deepwater Asset Management, “It’s now more clear that [Amazon] can’t miss out… They’re not doing it just because Google and Microsoft are making investments. They’re doing it because those investments and the progress is so substantial that they need to move.”
This latest investment builds upon an existing partnership between Amazon and Anthropic. The latter already offers its Claude large language models through Amazon Web Services (AWS), empowering enterprise clients to develop generative AI solutions tailored to their users’ needs.
The question arises: why allocate $4 billion to a company with which Amazon already has an established rapport? Anthropic clarified in a statement that this endeavor ensures the clientele of Amazon gains expanded access to the AI repertoire of Anthropic, including the capacity to “fine-tune” and “customize” models.
Additionally, this move broadens Amazon’s spectrum of foundational models, encompassing large language models available through its Bedrock platform. Bedrock serves as a comprehensive resource for AWS customers, providing access to the fundamental models that fuel generative AI platforms.
Rowan Curran, Senior Analyst at Forrester, highlighted, “Whereas Microsoft is primarily sourcing its large language models through its partnership with OpenAI, Amazon has some native models in addition to this partnership as part of Bedrock and other partnerships that are part of the broader AWS Marketplace… This is a reemphasizing of Amazon’s position that they are a player in the generative AI market, and that they are doing it in a kind of multipronged way.”
Furthermore, this maneuver bolsters Amazon’s competitive stance against Microsoft and Google in the cloud computing sector. By making this substantial investment in Anthropic, Amazon underscores its commitment to retaining its customers’ attention and loyalty amidst intensifying competition.
Analyst Scott Devitt from Wedbush affirmed, “Amazon’s prioritization of AI has been an area of investor debate in recent quarters, and we think today’s announcement signals a newfound urgency in Amazon’s strategy to further integrate generative AI into its AWS suite of services… The agreement has the potential to accelerate adoption and deployment of additional generative AI capabilities to AWS customers and should ease investor concerns that Amazon has been less proactive than its peers in its approach to generative AI, in our view.”
Beyond AWS, Amazon anticipates broader advantages from this deepened dive into generative AI. The company envisions employing Anthropic’s technology and its own AI expertise to enhance the consumer shopping experience on Amazon.com. This advancement aims to enable users to search for products based on specific occasions or life events, streamlining the shopping process.
As the tech industry continues to embrace the potential of AI, it is evident that the race for supremacy in this field shows no signs of abating. With major players like Amazon, Microsoft, and Google pushing the boundaries of artificial intelligence, the trajectory of technological progress remains dynamic and unpredictable.
Source: Yahoo Finance
