The UK’s competition watchdog has ruled on Amazon’s investment in AI firm Anthropic, stating no further inquiry is needed.
- The Competition and Markets Authority concluded that the investment doesn’t create a significant merger situation.
- Anthropic’s revenues in the UK remain below £70 million, making the deal less significant in competitive terms.
- Amazon invested $4 billion, including a $1.25 billion infusion in September 2023, convertible under conditions.
- The CMA’s decision draws parallels with a similar ruling on Microsoft’s partnership with Mistral AI.
The UK’s Competition and Markets Authority (CMA) recently assessed Amazon’s substantial investment in the California-based AI firm Anthropic. The regulatory body determined that this financial infusion does not necessitate any additional investigation under its merger control mechanisms. The basis for this decision rests on two primary factors: Anthropic’s UK turnover is far below the £70 million threshold, and the combined share of market supply by Amazon and Anthropic does not reach 25% within any sector.
Amazon’s financial commitment to Anthropic is sizeable, amounting to $4 billion. This includes a notable $1.25 billion investment made in September 2023, with an earlier commitment of $2.75 billion in March 2024. Interestingly, these investments come with stipulations that allow for conversion into equity, conditional upon certain undisclosed terms. Part of the agreement between the two entities includes Anthropic’s use of Amazon Web Services (AWS) as its principal cloud infrastructure provider. This agreement involves the deployment of Amazon’s proprietary AWS Trainium and Inferentia chips for developing future foundational models.
Beyond the financial component, Amazon has secured several strategic rights through this partnership. These include rights to consultation and advisory roles in Anthropic’s key business operations, along with a provision for a ‘right of first notification’ in the event of potential changes in Anthropic’s control. Such strategic positioning highlights Amazon’s vested interest in steering Anthropic’s commercial trajectory.
Despite initial apprehensions about the competitive implications of this deal in the UK, the CMA’s findings were resolute. This outcome is reminiscent of a previous situation involving the CMA, where Microsoft’s collaboration with Mistral AI was similarly deemed non-problematic. Anthropic, known for its Claude AI language models—a contender to Chat-GPT—continues to attract significant investment from industry giants, including Alphabet’s Google, Menlo Ventures, and Spark Capital.
The CMA’s ruling reaffirms its approach to market oversight, focusing on material competitive impact.
