AI Allies Align: Google Invests $40 Billion In Anthropic, After Amazon's $5 Billion

In the history of new technologies, after the initial burst of innovation, there have always been alliances to consolidate financial and operational power. Westinghouse, General Electric, ATT, General Motors, the Sony, Phillips, Toshiba DVD alliance and, of course, the early Microsoft-Intel "Wintel" duopoly in personal computers, followed by the Apple vs Google/Samsung competition in mobile phones. 

So it is no surprise to see a similar consolidation beginning to take shape in AI. What is interesting is that Anthropic, the ostensible 'fast follower' in historic Silicon Valley terms, is attracting such a strong set of allies so soon in the process. Some of this may be due to the superiority of Anthropic's Claude AI for certain tasks, like coding. But some of it may be the result of concerns about OpenAI's Sam Altman. There is also the possibility that Big Tech is hedging its bets and investing in both so that they are sure to come out on the winning side. The old line about one lawyer in town starving but two getting rich may also apply as Anthropic and OpenAI emerge as the clear frontrunners, with the various Chinese firms offering another possible alternative. Whatever the outcome, it is clear that industry concentration is going to be the norm, again, in AI as it has been in tech since the initial dotcom era. JL

Cris Tolomia reports in Quartz:

Google will invest up to $40 billion in Anthropic, the AI startup behind the Claude family of models, at a $350 billion valuation. Separately, Google Cloud has agreed to deliver five gigawatts of computing power to Anthropic across five-years, with the door open to additional gigawatts down the line. That computing arrangement builds on a three-way agreement between Anthropic, Google, and Broadcom. (This follows) a $5 billion infusion in Anthropic from Amazon, with an option to put in $20 billion more. The fundraising surge reflects booming appetite for Claude Code, Anthropic's AI agent built to accelerate software writing.

Alphabet $GOOGL +1.72%'s Google will invest up to $40 billion in Anthropic, the AI startup behind the Claude family of models, at a $350 billion valuation, according to Bloomberg. Under the terms of the deal, the first $10 billion arrives as an upfront cash commitment, while the remaining $30 billion is tied to whether Anthropic clears certain performance benchmarks. 

Separately, Google Cloud has agreed to deliver five gigawatts of computing power to Anthropic across a five-year window, with the door open to several additional gigawatts down the line, according to Bloomberg. That computing arrangement builds on a three-way agreement between Anthropic, Google, and Broadcom $AVGO -1.08% that was announced earlier this month.

 

Earlier this week, Anthropic announced a $5 billion infusion from Amazon $AMZN -1.09%, according to Reuters, with an option for Amazon to put in as much as $20 billion more over time. Both deals value Anthropic at $350 billion — the same figure attached to a funding round the company closed in February.

The fundraising surge reflects booming appetite for Claude Code, Anthropic's AI agent built to accelerate software writing, which Bloomberg says has driven the company to seek capital at a rapid clip. Anthropic's Cowork agent, pitched at workers outside the engineering world, is also seeing rapid adoption, the company said. According to Bloomberg, current and former Google employees say the company's top executives have grown anxious about being outpaced in AI coding, a fast-growing segment where Anthropic has established a commanding lead.

Before launching Anthropic in 2021 with a cohort of colleagues who had departed OpenAI, Dario Amodei spent time at Google working in AI research. The two companies have maintained a close business relationship since then. Prior to the new deal, Google had put roughly $3 billion into Anthropic and had pledged to hand over as many as one million of its tensor processing unit chips to the startup, Bloomberg reported.

Google stock was up more than 1% Friday following the news.