Amazon is reportedly negotiating the possibility of increasing its investment in AI startup Anthropic and injecting billions more dollars into the company as part of its aggressive efforts in the AI field.

According to The Information, Claude's deal with the chatbot maker hinges on a key condition: Anthropic must employ chips developed by Amazon to train its AI models.

This potential investment builds on Amazon's existing $4 billion investment in Anthropic, completed in March 2024. As part of the previous deal, Anthropic agreed to use Amazon Web Services (AWS) as its primary cloud provider and provide AWS customers with early access to its AI model.

Amazon has invested heavily in developing its AI chip capabilities to compete with Nvidia, the dominant player in the AI space. The tech giant unveiled its next-generation Graviton4 and Trainium2 chip families at the 2023 AWS re:invent conference, touting them as faster and more cost-effective options for AI workloads.

Anthropic currently uses Nvidia chips for AI training, but Amazon's terms could force the startup to migrate to its own silicon, including AWS Trainium and Inferentia chips. It would also raise awareness of Amazon's offerings.

Founded in 2021 by former OpenAI executives Dario and Daniela Amodei, Anthropic has established itself as a competitor to OpenAI with its Claude AI model. The startup recently debuted an AI agent designed to perform complex autonomous tasks on a computer, and while there is potential friction regarding hardware requirements, since expanding an AI business requires significant capital, Amazon's offer could provide important growth could provide assistance.

To date, Anthropic has raised about $9.7 billion, with other notable backers including Google's parent company, Alphabet, with an upfront investment of $500 million and a commitment for an additional $1.5 billion.Anthropic's current valuation is around $40 billion, reflecting growing interest in generative AI technology is said to be hovering around $40 billion, reflecting the growing interest in generative AI technology.

Amazon's deep involvement with Anthropic could lead to regulatory scrutiny. In the UK in particular, the Competition and Markets Authority (CMA) has expressed concern about the concentration of power in the hands of a few major AI players; in August 2024, the CMA opened an investigation into Amazon's funding of Anthropic, but ultimately approved the $4 billion investment in September, stating that the criteria for detailed merger review The CMA stated that it had not reached the criteria for a detailed merger review.

If this new deal goes through, it could reignite regulatory concerns, especially as Amazon gains a foothold in the AI ecosystem.

The investment supports Amazon's broader strategy of securing a leading role in AI by integrating its cloud services and proprietary chips into the workflows of leading AI startups AWS already has services like Amazon Bedrock to facilitate the development of generative AI applications and has established itself as a key player in the cloud AI market.

For Amazon, success in this endeavor will not only increase the credibility of AI, but will also increase AWS' appeal to enterprise customers seeking advanced AI capabilities. ...