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Amazon Finalizes $4 Billion Investment in AI Startup Anthropic

On Wednesday, Amazon committed an additional $2.75 billion to the rapidly growing artificial intelligence business Anthropic, fulfilling a September 2018 option. Its $1.25 billion investment must be paying off, or perhaps they’ve decided there aren’t any more horses to bet on.

Anthropic paid $1.25 billion in September for the business in exchange for a minority stake and a number of tit-for-tat agreements, including the company’s continuous use of AWS for its significant computing requirements.

Amazon had until the end of the first quarter to determine whether to give the full $4 billion, but it made the choice just before the deadline.

Businesses like Microsoft and Amazon are compelled to act through middlemen, primarily Anthropic and OpenAI, because they are unable, for whatever reason, to generate adequate models internally. The two, by taking sides with one of these powerful enemies, have gained a great deal and have not yet suffered many setbacks.

There aren’t many advantages to Amazon’s decision to invest the maximum amount after (supposedly) getting a close-up look at their AI production process.

The $5 billion, four-year acquisition strategy of OpenAI by Anthropic.

These companies have too much strategic sense to make significant investments in the AI sector, even though they have sizable war chests put up for this exact purpose (outspending rivals when they can’t out-innovate them). Right now, the state of AI is like a roulette table, where black and red represent Anthropic and OpenAI, respectively.

Nobody, least of all the companies that were unable to anticipate or build this technology, can accurately forecast where the ball will land. However, you should only bet on black if your most formidable opponent puts their chips on red.

This is particularly true if Anthropic’s September valuation, which was clearly lower than it is now, allows you to invest. Amazon placed a wager on black at a discount in this instance.

But if things were questionable, as they most likely were at Inflection before Microsoft acquired the company, Amazon may have pulled out or just contributed less than the full $2.75 billion. That may have sent the opposite message, though, implying that nobody wanted attention—not even the multibillionaire investors who were already in place.

This year will reveal what the likes of Amazon, Apple, Microsoft, and other international corporations believe they can do to profit from this seemingly game-changing technology.


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