Google has announced it is investing $2 billion in artificial intelligence (AI) startup Anthropic, adding fuel to the AI race to the top. The move comes after Amazon announced it was pouring $4 billion into the same startup back in September 2023.
Anthropic is focused on developing its rival to ChatGPT, called Claude. Claude is a “next-generation AI assistant” that is featured on platforms such as Quora, DuckDuckGo, and Juni Learning. The start-up has already achieved a valuation of $4 billion earlier this year.
Anthropic was co-founded by former OpenAI executives and siblings Dario and Daniela Amodei in 2021.
The announcement is timely considering it arrives on the same day that the Biden Administration released its executive order on artificial intelligence.
Google Increases its Bet on Anthropic
In late 2022, Google invested $300 million in what was at the time a 10% stake in Anthropic. They also reportedly invested over $550 million earlier this year.
Google’s investment is one of many AI plays the company has made since the race began nearly a year ago. Google has also invested in the AI video production app Runway and open-source company Hugging Face, while also releasing its own proprietary AI and Generative AI solutions.
Wall Street Wants its AI Return on Investment
The market reaction to Google’s investment was positive, with the company’s share price climbing as high as 2.6% after the news broke. Amazon also saw a 3.8% boost to its stock, while Microsoft closed 2.26% higher.
Wall Street is paying close attention to the cloud computing segments of big tech companies as they report their earnings, keen to see whether the massive upfront investments in AI are paying off yet.
Microsoft was the season’s victor, having recorded a 28% constant currency basis increase in its Microsoft Azure cloud division. Google Cloud, on the other hand, didn’t have quite so stellar results, recording a 22% growth rate compared to last year. Amazon’s AWS division saw revenue grow by 12.3% from the same time last year.
As big tech giants like Google, Amazon, Microsoft, and others continue to dramatically increase investment in AI startups such as OpenAI and Anthropic, Wall Street will continue to pressure for return on investment and revenue growth vs. sunk costs.
Google and Anthropic: Not to be outdone by Microsoft and OpenAI
Google’s investment in Anthropic is a sign that the company is committed to strengthening its AI ambitions and diversifying its portfolio. Anthropic is quickly becoming one of the most promising AI startups on the market, and Google is clearly interested in getting its hands on it.
With Microsoft owning effectively half of OpenAI at 49%, Google has no choice but to look elsewhere.
The investment is also a sign that the AI race is heating up. Google and Amazon are two of the biggest tech companies in the world, and they are both pouring billions of dollars into AI research and development. This is good news for consumers, as it means that we can expect to see some major advances in AI technology in the coming years.
Disclaimer: The author of this article is a current employee of Google. This article does not represent the views or opinions of his employer and is not meant to be an official statement for Google, or Google Cloud.
