Amazon scrambles for its place in the AI race

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2024-03-30 10:30:04

By Alex Heath , a deputy editor and author of the Command Line newsletter. He has over a decade of experience covering the tech industry.

This week, Amazon completed the second phase of a deal announced last September, when it committed to investing up to $4 billion in OpenAI rival Anthropic. The additional $2.75 billion invested is Amazon’s largest check ever into another company and yet another signal of how critical the development of large language models has become to Big Tech.

The logic is simple: Amazon needs to offer models through AWS that compete with the OpenAI-powered offerings of its arch cloud rival, Microsoft, and Anthropic is the best alternative that exists. If we rewound the clock back to when Big Tech could make large acquisitions without them being blocked by regulators, I’m sure Amazon would have tried to buy Anthropic outright. Instead, it’s passively investing billions of dollars and telegraphing that it only has a minority stake with no board seat. Conveniently for Amazon, Anthropic has meanwhile agreed to spend $4 billion on AWS over the next several years.

There are obvious parallels here to Microsoft’s funding of OpenAI’s ever-growing compute needs. But Amazon’s relationship with Anthropic is far less cozy than it appears on the surface. In fact, another part of Amazon is trying to compete directly with Anthropic’s models. I’ve learned that Amazon’s AGI team, led by SVP Rohit Prasad, has the aggressive goal of outperforming Anthropic’s latest Claude models by the middle of this year. Its forthcoming flagship model, internally codenamed Olympus, is in training and quite large with hundreds of billions of parameters.