AI race continues: Amazon invests another 4 billion dollars in Anthropic - OpenAI's biggest competitor

On 22 November 2024, Anthropic announced that Amazon had increased its investment in the AI start-up by four billion US dollars. This doubles Amazon's stake to eight billion dollars. Anthropic produces Claude, an AI assistant that is considered the most promising competitor to ChatGPT from OpenAI.

Amazon supplies chips

As part of the new deal, Amazon is also securing a lucrative business. Anthropic needs powerful chips for training and executing its own AI bots and Amazon is developing them.

In future, the AI manufacturer will use Amazon's customised Trainium for training AI models and its Inferentia chips for executing trained models. A direct collaboration with Annapurna Labs is apparently also planned.

Annapurna Labs is an Israeli microelectronics company that has been a wholly owned subsidiary of Amazon.com since January 2015. Inferentia and Trainium are developments of this subsidiary.

Anthropic, which was founded in 2021 by former OpenAI executives Dario and Daniela Amodei, will continue to use Google's cloud services, but will also utilise Amazon's infrastructure.

Anthropic's AI and Amazon's Interests

The partnership between Amazon and Anthropic goes beyond just an investment; it taps into the growing need for advanced AI to stay competitive in the rapidly evolving tech landscape. Amazon’s interest in Anthropic is driven by the potential to enhance its existing products, particularly Alexa, and capitalize on Anthropic's AI advancements.

Anthropic's Claude, an AI assistant, is considered one of the most promising competitors to OpenAI’s ChatGPT. With Amazon investing heavily in the startup, the company aims to incorporate Claude’s capabilities into various services, particularly Alexa. This move signals Amazon's commitment to improving its voice assistant through more natural conversations and enhanced features, such as personalized shopping and better smart home control. The collaboration represents a shift in Amazon’s approach, moving away from developing its own AI models in-house to leveraging specialized expertise from companies like Anthropic.

Additionally, this partnership is part of a larger trend where big tech companies are forming alliances with AI startups to accelerate development in a competitive market. Much like Microsoft's collaboration with OpenAI, Amazon is betting on Anthropic's AI technology to gain an edge over rivals like Google, which has made substantial strides in AI for voice technology.

Moreover, Anthropic’s Claude will play a central role not only in improving Alexa but also in supporting Amazon's broader AI ambitions, particularly in cloud services and machine learning. This alliance highlights the strategic value that Anthropic brings to Amazon, offering advanced AI capabilities that Amazon’s own resources were not able to deliver, at least not yet.

In the long run, this partnership could significantly impact Amazon’s AI-driven products and services, from Alexa to cloud infrastructure, as well as its broader positioning in the AI industry. With Anthropic continuing to work with other major cloud providers, Amazon will likely need to work closely with the startup to ensure it secures its place in the future of AI innovation.

Amazon's AI Strategy

Amazon's investment in Anthropic and its own AI developments reflect a strategic shift aimed at bolstering its capabilities in the rapidly advancing AI space. The company is working on a proprietary generative AI platform called Olympus, which is set to rival models like OpenAI’s GPT-4 and Google’s Bard. Olympus is designed to handle multimodal data, processing not only text but also images and video. This ability allows it to enhance Amazon's core products, such as Alexa, and improve its search and e-commerce functions. For example, users will soon be able to search for specific scenes in videos with simple text-based prompts, such as looking for a particular sports moment.

Amazon's emphasis on developing its own AI tools instead of relying on third-party providers like Anthropic positions the company as a major player in the AI arms race. This new generative AI model, potentially twice the size of GPT-4, is designed to give Amazon a competitive edge across its product lines, from retail to smart devices. In addition, the company’s continued investment in Anthropic, with a $4 billion stake, suggests that it aims to foster innovation while also positioning itself as a key player in AI’s future.

These moves indicate that Amazon is setting the stage for future AI-driven offerings, with Olympus at the heart of its strategy. It shows how Amazon intends to reduce reliance on external AI technologies while enhancing its own product ecosystem, including consumer-facing technologies like Alexa, which could soon benefit from the capabilities of Claude, Anthropic’s chatbot model.