Google’s Investment in Anthropic Heats Up the AI Arms Race

Google has taken a 10 percent stake in artificial intelligence startup Anthropic for about $300 million. The move follows reports that the Alphabet-owned company has prioritized an acceleration of AI efforts, so as not to get left behind by OpenAI and its increasingly popular ChatGPT app. The cash infusion gives Google a roughly 10 percent stake in the San Francisco-based Anthropic, which Financial Times described as among “a new generation of companies trying to claim a place in the booming field of ‘generative AI,’” a sector that has triggered a veritable “AI arm’s race,” according to FT.

The deal, which was cut in late 2022 but not previously reported, “boosts Anthropic’s finances at a time when it is buying substantial computing resources from the search company’s cloud computing division,” says Financial Times, noting “Google confirmed it had made an investment and that it had a large cloud contract with Anthropic,” but declined further comment.

The deal is similar to the $1 billion cash-for-computing investment Microsoft initiated in OpenAI three years ago and recently expanded to $10 billion. It underscores the outsized influence “a small number of Big Tech companies have assumed over other companies working on AI, which need access to cloud computing platforms to handle the giant AI models” required for generative AI, which FT describes as “sophisticated computer programs that can write scripts and create art in seconds.”

While Microsoft’s 49 percent stake in OpenAI sees it integrating the company’s technology into its own services, FT writes that “Google’s relationship with Anthropic is limited to acting as the company’s tech supplier,” at least at this early stage.

Anthropic was formed in 2021 by expatriate OpenAI researchers, led by Dario Amodei. FT says the split was caused by “a disagreement” over OpenAI’s direction after Microsoft invested, a move some feared “would set it on a more commercial path and detract from its original focus on the safety of advanced AI.”

Anthropic’s intelligent chatbot, Claude, has yet to be released publicly, as has OpenAI’s app, though Claude is being position as a potential ChatGPT rival. The Verge, which cites a comparative analysis of the two systems, describes Claude as “in closed beta.”

While “Google already has plenty of in-house expertise developing AI language systems,” according to The Verge, “one motivation for the deal is simply building up Google Cloud computing business,” which according to Statista was the world’s fourth largest by revenue, while Microsoft Azure was No. 1.

Google Opens ChatGPT Rival Bard for Testing, as AI War Heats Up, The Wall Street Journal, 2/6/23
An Important Next Step on Our AI Journey — Sundar Pichai, Google Blog, 2/6/23
OpenAI Is Drawing Competition from Fleet of Startups, Bloomberg, 2/6/23

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