Google Commits $2 Billion in Funding to AI Startup Anthropic
Google move follows Amazon investment as tech giants place bigger bets on startups racing to develop artificial intelligence
Google agreed to invest up to $2 billion in Anthropic, building on its earlier investment in the artificial-intelligence company and adding fuel to the race between startups trying to achieve the next big breakthrough in the emerging technology.
Google invested $500 million upfront into the OpenAI rival and agreed to add $1.5 billion more over time, people familiar with the matter said. The investment follows a separate commitment Amazon AMZN 6.83%increase; green up pointing triangle made last month to invest $4 billion in the company, which was founded by former OpenAI engineers in 2021 with the goal of developing rival generative AI models.
Google, owned by parent company Alphabet GOOG -0.03%decrease; red down pointing triangle, already invested $550 million in Anthropic earlier this year.
Google’s new deal, which hasn’t previously been reported, is the latest one that technology giants have struck with artificial intelligence businesses, which need billions of dollars to train more advanced versions of their AI systems. It reflects the excitement among tech giants to align themselves with promising startups trying to seize upon the overnight success of ChatGPT and develop their own AI-powered audio, text and image technology.
In January, Microsoft signed a landmark $10 billion investment in OpenAI, the maker of the breakout ChatGPT bot, adding to the $3 billion it had already invested and giving it a 49% stake in the company. The startup, led by Chief Executive Sam Altman, has committed to using Microsoft’s Azure cloud platform to train its AI models.
The three major providers of on-demand computing—Amazon, Google and Microsoft—have increasingly allied themselves with either Anthropic or OpenAI, the two startups with the grandest ambitions for future artificial intelligence models.
Anthropic’s founders, led by the siblings Dario and Daniela Amodei, left OpenAI two years ago after a dispute with Altman over how to safely develop artificial intelligence.
Since then, Anthropic has been in an intensifying battle with OpenAI to secure the training resources and deep-pocketed backers needed to become the technology’s leaders. Anthropic offers an AI assistant called Claude that competes with ChatGPT, as well as a similar tool it sells to businesses.
Anthropic’s two megadeals with Amazon and Google mean it has raised almost $7 billion in the past year alone. Anthropic has also struck large deals with Amazon and Google to train and run its models.
The AI company was largely bankrolled by Sam Bankman Fried’s FTX until the crypto exchange collapsed last year, pushing Anthropic to find other backers. It turned to the cloud giants as well as more traditional Silicon Valley investors like Spark Capital and Menlo Ventures. Earlier this year, it achieved a valuation of $4 billion.
Anthropic has told investors that the leaders of the AI race could be cemented as soon as next year and has painted a rosy picture of the future where AI tools could lead to virtual assistants, more intelligent search engines and more advanced content generation for things like movie scripts and videogames.
Google has bet big on AI as it tries to catch up to Amazon and Microsoft in the lucrative cloud-computing market, hoping the new software will encourage corporate customers to increase spending.
Shares in parent company Alphabet have fallen more than 10% since it announced lower-than-expected sales growth in Google Cloud during third-quarter earnings on Tuesday, dampening enthusiasm for the unit’s AI push. Google executives said during an analyst call that some customers had recently reduced spending, and the company would continue investing aggressively in cloud.
Besides Anthropic, Google has invested in the AI startups Runway, a maker of video production tools, and Hugging Face, an open-source software service. Google has also spent billions developing its own sophisticated AI systems, including an unreleased algorithm called Gemini that it hopes will compete directly with the technology powering ChatGPT.