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Google is making a new investment of more than $1 billion in OpenAI rival Anthropic, strengthening its position in the start-up as Silicon Valley titans rush to develop cutting-edge artificial intelligence systems.
The Alphabet-owned search behemoth has already invested about $2 billion in Anthropic and is now increasing its stake in the group, according to four people familiar with the situation.
Anthropic, best known for the Claude family AI models, is one of the leading start-ups in the new wave of generative AI companies that build tools to generate text, images and code in response to user queries.
Google invented the technology on which models such as Claude and OpenAI GPT4 are built, but has fallen behind in the race to commercialize the powerful technology. The investment in Anthropic is part of the Silicon Valley company’s efforts to diversify its artificial intelligence business and take on deep-pocketed rivals including Microsoft, Meta and Amazon.
Anthropic was also on the cutting edge of insurance an additional 2 billion dollars from Silicon Valley venture capitalists led by Lightspeed Venture Partners in a separate deal expected to triple the start-up’s valuation to about $60 billion, according to several people with direct knowledge of the deal.
The start-up is in fierce competition with rivals OpenAI and Elon Musk’s xAI, which raised more than $10 billion last year, as well as Facebook parent company Meta and Microsoft.
The new tranche of money from Google in Anthropic adds to Amazon’s total investment of $8 billion, the e-commerce giant’s largest investment ever, announced in the last 18 months. Amazon is also working on it install Claude models into the next generation of your Alexa speaker.
The close relationship between AI startups and their Big Tech backers was investigated by the Federal Trade Commission during the Joe Biden administration.
Under outgoing Commissioner Lin Khan, the FTC targeted Google and Amazon’s investments in Anthropic and Microsoft’s partnership with OpenAI, considering the deal’s impact on competition in the nascent sector. But with Khan stepping down in the coming weeks, traders are growing more confident in their ability to make connections.
Anthropic’s annual revenue hit $1 billion in December, up about 10 times from a year earlier, according to a person with knowledge of the company’s finances.
Despite this, investors do not expect Anthropic or its competitors to be profitable in the near future, given the high costs of developing leading AI models. With new discoveries, they believe the technology could ultimately create trillions of dollars in value.
“I am now more confident than ever before that we are very close to powerful capabilities. . . Artificial intelligence systems that are better than almost all humans at almost all tasks,” Anthropic CEO Dario Amodei said in an interview with CNBC on Tuesday.
Founded in 2021 by a group of former OpenAI employees, Anthropic sought to differentiate itself from its rivals by focusing on AI security. In the past months, he kidnapped several OpenAI employees, including the company’s co-founder.
The group was also the first to announce certain features, such as the ability for AI to control computers, and this year, along with rivals, it focused on creating AI agents — software that can perform tasks and navigate the web on behalf of human users.
Google and Anthropic declined to comment.
