AI Finds Necessity in Frenemies
A very old proverb comes to mind when I think about this exact period in AI—because, really, it’s a moment when the enemy of your enemy can be your compute provider.
I’m referencing, of course, Elon Musk’s decision to strike a deal with Anthropic and sell it access to his data center campus in Memphis, Colossus 1. Until this week, Musk had seemed to view Anthropic strictly as a bitter rival to his xAI, which he recently folded into SpaceX; now the two companies are business partners. (Honestly, the AI industry treats labels and relationships much as a Fire Island share house does: It’s all very fluid.) Musk said he met with the team at Anthropic last week and decided to do the deal when “no one set off my evil detector.”
It’s a dramatic change in tone for Musk, who’d been merrily calling the startup “Misanthropic” as often as he could for several months. Perhaps he just misunderstood the word’s definition? No, it’s a matter of timing.
Anthropic’s Claude Code and Cowork products have become enormous hits, but the startup has faced a problem in securing the compute needed to keep up with demand. Having just really caught everyone’s attention after several years in the shadow of Google and OpenAI, Anthropic absolutely doesn’t want to slow down. It wants the compute as immediately as possible.
Meanwhile, Musk is incentivized to sell off Colossus access at this very moment in a way he wasn’t even a few months ago.
The Anthropic deal helps improve the financial situation for his SpaceX conglomerate as it prepares for an IPO next month. In addition, Musk got Anthropic to express interest in orbital data centers in its announcement of the Colossus deal; presumably, he’ll point to Anthropic’s interest when he talks up outer space data centers on his IPO road show, even if they remain a totally unproven concept, like Bigfoot.
I wonder what the Anthropic tie-up means for the deals Musk did just a few weeks ago—when he sold compute to Cursor, a top Anthropic rival, and said he’d acquired an option to buy the startup or fork over a $10 billion break-up fee. There’s a very good chance we’re a few months away from Musk suing to get out of paying that fee, especially if Anthropic continues on its recent pace and seems to dim Cursor’s prospects further, making the startup less attractive to Musk.
Another factor at play: Don’t underestimate how much motivation Musk may be drawing from the chance to screw over Sam Altman at an instant when their relationship has been put on full public display.
In the court case between the two over OpenAI, Musk’s lawyers have been trying their best to shove their fingers in Altman’s eye for the last two weeks. But they haven’t gotten close to securing a decisive victory, which must irritate Musk, who has publicly made Altman a total bête noire.
So with Anthropic, Musk gets another opportunity to kick the shins of one enemy by locking arms with another, which reminds me of another adage: With friends like these…