Amazon Eyes Second Billion-Dollar Investment in Anthropic

Amazon is in talks with artificial intelligence startup Anthropic for a second major investment worth billions of dollars. This would be a new financial commitment following Amazon's announcement in September last year of a $4 billion investment in Anthropic. However, this investment comes with special conditions, as Amazon requires Anthropic to use cloud servers powered by Amazon's chips when training artificial intelligence models.

Anthropic, co-founded by former OpenAI executives Dario Amodei and Daniela Amodei, is considered the biggest competitor to OpenAI. Anthropic has raised $9.7 billion, nearly half of OpenAI's total funding of $21.9 billion. At the beginning of this year, Anthropic estimated that it would spend over $2.7 billion in 2024 as it trains and expands its AI products. According to The Information, for several months, Anthropic has been discussing new financing at a $40 billion valuation.

The focus of the negotiations between Anthropic and Amazon is on how much of Amazon's chips Anthropic agrees to use, which will directly affect the scale of Amazon's total investment. For Anthropic, switching to Amazon's self-developed Trainium chips could face technical challenges. Amazon's accompanying software is not as mature as the Nvidia Cuda software that developers are familiar with. Additionally, this could increase Anthropic's dependence on Amazon's Trainium servers, limiting its flexibility in choosing other cloud service providers or building its own data centers in the future. Amazon, on the other hand, hopes to promote the use of its own chips by Anthropic to reduce reliance on Nvidia chips. Sources involved in the discussions say that as part of the initial cooperation, Anthropic has agreed to use some Trainium servers, but still mainly relies on Nvidia servers.

Reports indicate that in the new round of investment, any investment deal between Anthropic and Amazon may be conducted in the form of convertible notes, which will be converted into equity after Anthropic successfully raises funds from other investors. The two parties are also negotiating a cloud agreement, under which they will share revenue from selling Anthropic models to Amazon cloud customers, with Anthropic agreeing to rent dedicated servers from Amazon to develop its technology.

In addition to its cooperation with Amazon, Anthropic has also established a smaller cloud partnership with Google. Last year, Google pledged to invest $2 billion in Anthropic, but the UK's Competition and Markets Authority announced an investigation in October. The agency will ensure that large-scale tech investments in the artificial intelligence industry do not distort the market and prevent a few tech companies from dominating.