Amazon steps up AI race with up to $4 billion deal to invest in Anthropic

Amazon.com (AMZN.O) on Monday said it will invest up to $4 billion in cash in the high-profile startup Anthropic, in its effort to compete with growing cloud rivals on artificial intelligence.

Amazon’s employees and cloud customers will gain early access to technology from Anthropic as part of the deal, which they can infuse into their businesses. The San Francisco-based startup also committed to rely primarily on Amazon’s cloud services, including training its future AI models on large quantities of proprietary chips it would buy from the online retailing and computing giant.

In a joint interview, the CEOs of Amazon’s cloud division and Anthropic said the immediate investment will be $1.25 billion, with either party having the authority to trigger another $2.75 billion in funding by Amazon.

They declined to state how much Amazon now would own of Anthropic or the startup’s updated valuation, last estimated at more than $4 billion. Amazon said it would not gain a board seat and that its stake amounted to a minority position.

The news represents perhaps Amazon’s biggest answer yet to challenges from Microsoft (MSFT.O) and Alphabet’s (GOOGL.O) Google, smaller cloud rivals that have marketed or developed powerful AI this year. The deal also shows ongoing maneuvering by the cloud companies to secure ties with AI startups reshaping their industry.

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