- Google commits to invest $2 billion in AI startup Anthropic.
- Anthropic and Google have a major, long-term cloud services deal.
- The investment heightens competition between Google and Amazon in both AI and cloud services.
October 28, 2023: Google has made a big move in the AI industry by agreeing to invest $2 billion in Anthropic, a rising star in artificial intelligence. This deal boosts Google’s already strong connection with the startup and adds fuel to Silicon Valley’s growing interest in AI technologies.
The investment is made in the form of a convertible note. This means it’s a loan that will turn into company shares. Anthropic revealed this detail, saying it’s a similar kind of deal to one they got from Amazon. Amazon had offered up to $4 billion similarly earlier this year.
In this new deal, Google’s parent company, Alphabet, will first put in $500 million.
They promise to add another $1.5 billion later. People who know about this but don’t want their names used say this is over and above the $550 million Google had already invested in Anthropic this year.
Before this new money deal, Google and Anthropic had another big agreement. They agreed that Anthropic would use Google’s cloud computing services for many years to come. A person who knows about this says the cloud deal is even bigger than this new $2 billion investment.
Anthropic has been making lots of deals this year. One key person behind these deals is Vu Bui. He joined Anthropic in September and leads the talks with people who want to invest money in the company.
The next step for Anthropic might be to get regular funding, not just convertible notes. At that time, shares from Google and Amazon will turn into real company shares.
People talking about this say the company could be worth between $20 billion and $30 billion. This is much more than its $5 billion value earlier this year.
For Google and Amazon, putting money in a company like Anthropic is smart. It helps them get close to the next big things in AI. It also helps them get more customers for their cloud services, which AI companies will need lots of.
But, it’s a bit awkward because Google and Amazon are also competitors. Google was surprised when they found out Anthropic would use Amazon’s cloud services as well.
According to papers from Amazon, it has invested $1.25 billion in Anthropic. They can also put in $2.75 billion more later. Both Google and Amazon’s deals were loans that can turn into company shares.
All this puts Google and Amazon in competition with Microsoft. Microsoft is spending more than $10 billion on OpenAI, a rival to Anthropic. Both these companies are working on chatbots that can understand and reply to what people say.
Anthropic’s chatbot, named Claude, focuses on being fair and not biased.