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Amazon boosts AI rivalry with $4B in Anthropic

Amazon announced on Monday a substantial investment of up to $4 billion in the AI company Anthropic, entering the competitive AI arena currently dominated by Microsoft, Google, and OpenAI.

OpenAI’s ChatGPT, a chatbot capable of generating poems, essays, and more with minimal prompts, has led to significant investments in the AI sector.

Amazon had previously disclosed its plans to enhance its Alexa voice assistant with generative AI to enable more natural conversations.

Anthropic, based in San Francisco, is recognized as a leader in the field and boasts its chatbot, Claude, which competes with ChatGPT.

Amazon CEO Andy Jassy expressed respect for Anthropic’s team and foundation models, emphasizing their potential to enhance various customer experiences through collaboration.

Major tech companies and wealthy investors in Silicon Valley have poured resources into AI, searching for groundbreaking applications to justify their interest.

The success of ChatGPT has drawn attention to chatbots, sparking imitators and competitors, including Google’s Bard chatbot, as well as chatbots from Chinese tech giants Tencent and Baidu.

While the Anthropic-Amazon deal has implications in the AI chip development race, it is considered less pivotal in the chatbot realm. Anthropic will utilize Amazon’s chips for its next models, and the two companies plan to collaborate on the development of future chips.

All players in this field are looking to reduce their reliance on market leader NVIDIA for chips, according to Nick Patience, lead AI research analyst at S&P Global Market. Although making an impact in the short term may be challenging, partnerships like the Amazon-Anthropic deal could reshape the landscape over the next five years.

Anthropic has also committed to utilizing Amazon Web Services (AWS) cloud infrastructure for mission-critical workloads. Amazon will hold a “minority ownership position” in the AI company, which has already raised over $1 billion since its establishment in 2021.

The partnership indicates that Anthropic’s chatbot, Claude, will help AWS customers of all sizes develop new generative AI-powered applications.

This move intensifies competition between Amazon and Google, which had previously opened its cloud services to Anthropic and invested $300 million for a 10% stake in the company.

Given the immense computing power required for AI models, AI companies heavily rely on data centers provided by AWS, Google Cloud, and Microsoft Azure. Tech giants have increasingly explored collaborations with smaller AI firms as they pursue their AI ambitions, with Microsoft leading the way through a multibillion-dollar investment in OpenAI.

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