Amazon is making its largest outside investment in its three-decade history as it looks to gain an edge in the artificial intelligence race.
The tech giant said it will spend another $2.75 billion backing Anthropic, a San Francisco-based startup that’s widely viewed as a front-runner in generative artificial intelligence. Its foundation model and chatbot Claude competes with OpenAI and ChatGPT.
The companies announced an initial $1.25 billion investment in September, and said at the time that Amazon would invest up to $4 billion. Wednesday’s news marks Amazon’s second tranche of that funding.
Amazon will maintain a minority stake in the company and won’t have an Anthropic board seat, the company said. The deal was struck at the AI startup’s last valuation, which was $18.4 billion, according to a source.
Over the past year, Anthropic closed five different funding deals worth about $7.3 billion — and with the new Amazon investment, the total exceeds $10 billion. The company’s product directly competes with OpenAI’s ChatGPT in both the enterprise and consumer worlds, and it was founded by ex-OpenAI research executives and employees.
News of the Amazon investment comes weeks after Anthropic debuted Claude 3, its newest suite of AI models that it says are its fastest and most powerful yet. The company said the most capable of its new models outperformed OpenAI’s GPT-4 and Google‘s Gemini Ultra on industry benchmark tests, such as undergraduate level knowledge, graduate level reasoning and basic mathematics.
“Generative AI is poised to be the most transformational technology of our time, and we believe our strategic collaboration with Anthropic will further improve our customers’ experiences, and look forward to what’s next,” said Swami Sivasubramanian, vice president of data and AI at AWS cloud provider.
Amazon’s move is the latest in a spending blitz among cloud providers to stay ahead in the AI race. And it’s the second update in a week to Anthropic’s capital structure. Late Friday, bankruptcy filings showed crypto exchange FTX struck a deal with a group of buyers to sell the majority of its stake in Anthropic, confirming a CNBC report from last week.
The term generative AI entered the mainstream and business vernacular seemingly overnight, and the field has exploded over the past year, with a record $29.1 billion invested across nearly 700 deals in 2023, according to PitchBook. OpenAI’s ChatGPT first showcased the tech’s ability to produce human-like language and creative content in late 2022. Since then, OpenAI has said more than 92% of Fortune 500 companies have adopted the platform, spanning industries such as financial services, legal applications and education.
Cloud providers like Amazon Web Services don’t want to be caught flat-footed.
It’s a symbiotic relationship. As part of the agreement, Anthropic said it will use AWS as its primary cloud provider. It will also use Amazon chips to train, build and deploy its foundation models. Amazon has been designing its own chips that may eventually compete with Nvidia.
Microsoft has been on its own spending spree with a high-profile investment in OpenAI. Microsoft’s OpenAI bet has reportedly jumped to $13 billion as the startup’s valuation has topped $29 billion. Microsoft’s Azure is also OpenAI’s exclusive provider for computing power, which means the startup’s success and new business flows back to Microsoft’s cloud servers.
Google, meanwhile, has also backed Anthropic, with its own deal for Google Cloud. It agreed to invest up to $2 billion in Anthropic, comprising a $500 million cash infusion, with another $1.5 billion to be invested over time. Salesforce is also a backer.
Anthropic’s new model suite, announced earlier this month, marks the first time the company has offered “multimodality,” or adding options like photo and video capabilities to generative AI.
But multimodality, and increasingly complex AI models, also lead to more potential risks. Google recently took its AI image generator, part of its Gemini chatbot, offline after users discovered historical inaccuracies and questionable responses, which circulated widely on social media.
Anthropic’s Claude 3 does not generate images. Instead, it only allows users to upload images and other documents for analysis.
“Of course no model is perfect, and I think that’s a very important thing to say upfront,” Anthropic co-founder Daniela Amodei told CNBC earlier this month. “We’ve tried very diligently to make these models the intersection of as capable and as safe as possible. Of course there are going to be places where the model still makes something up from time to time.”
Amazon’s biggest venture bet before Anthropic was electric vehicle maker Rivian, where it invested more than $1.3 billion. That too, was a strategic partnership.
These partnerships have been picking up in the face of more antitrust scrutiny. A drop in acquisitions by the Magnificent Seven — Amazon, Microsoft, Apple, Nvidia, Alphabet, Meta and Tesla — has been offset by an increase in venture-style investing, according to Pitchbook.
AI and machine-learning investments from those seven tech companies jumped to $24.6 billion last year, up from $4.4 billion in 2022, according to Pitchbook. At the same time, Big Tech’s M&A deals fell from 40 deals in 2022 to 13 last year.
“There is a sort of paranoia motivation to invest in potential disruptors,” Pitchbook AI analyst Brendan Burke said in an interview. “The other motivation is to increase sales, and to invest in companies that are likely to use the other company’s product — they tend to be partners, more so than competitors.”
Big Tech’s spending spree in AI has come under fire for the seemingly circular nature of these agreements. By investing in AI startups, some observers, including Benchmark’s Bill Gurley, have accused the tech giants of funneling cash back to their cloud businesses, which in turn, may show up as revenue. Gurley described it as a way to “goose your own revenues.”
The U.S. Federal Trade Commission is taking a closer look at these partnerships, including Microsoft’s OpenAI deal and Google and Amazon’s Anthropic investments. What’s sometimes called “round tripping” can be illegal — especially if the aim is to mislead investors. But Amazon has said that this type of venture investing does not constitute round tripping.
FTC Chair Lina Khan announced the inquiry during the agency’s tech summit on AI, describing it as a “market inquiry into the investments and partnerships being formed between AI developers and major cloud service providers.”
Dara Khosrowshahi, CEO of Uber, speaking on CNBC’s Squawk Box outside the World Economic Forum in Davos, Switzerland on Jan. 22, 2025.
Gerry Miller | CNBC
Ride-hailing and food delivery app Uber is opening its “interest list” to users in Austin, Texas, who want to be first in line for Waymo robotaxis there.
The company said in a statement that users will “be able to travel across 37 square miles of Austin — from Hyde Park, to Downtown, to Montopolis” — when the Uber-Waymo service launches soon.
The so-called “interest list” allows users to receive Uber updates and bolsters their odds of being matched with a Waymo autonomous vehicle upon launch.
The vehicles that will be part of the Austin service are Jaguar iPace electric models equipped with Waymo’s driverless systems and labeled with both Waymo and Uber branding.
The Waymo rides in Austin will only be available through the Uber app, unlike in San Francisco and Los Angeles, where riders hail them through the Waymo One app.
In the face of investor pressure to step up its autonomous vehicle strategy after Tesla promised it would soon start producing robotaxis, Uber last year said it had begun testing a ride-hailing app with some of its employees.
While Tesla does not make vehicles that are safe to use without a human driver at the wheel, ready to steer or brake at all times, Elon Musk’s automaker in January said it will “begin launching” a driverless ride-hailing business “later this year” starting in Austin.
According to the Texas Department of Transportation, testing and operating a commercial robotaxi service in the state does not require the same types of special licenses and permits that other states require.
“Texas law allows for AV testing and operations on Texas roadways as long as they meet the same safety and insurance requirements as every other vehicle on the road,” a spokesperson for the department told CNBC by e-mail.
Uber CEO Dara Khosrowshahi is expected to discuss the impact of automated driving systems — or self-driving cars — on the company’s overall business and strategy on a fourth-quarter earnings call on Wednesday.
Apple shares fell on Wednesday after Bloomberg reported that Chinese regulators are considering whether to open a formal probe into the iPhone giant’s App Store fees and policies.
Shares of Apple were down 2.66% at 09:34 a.m. London time in premarket trading.
The State Administration for Market Regulation (SAMR) is looking into policies that include Apple taking a cut of as much as 30% on in-app spending, as well as blocking third-party payment services and app stores, Bloomberg reported Wednesday, citing people familiar with the matter.
China’s market regulator has not decided whether to formally open an investigation into Apple, according to the report.
Apple and China’s Ministry of Commerce was not immediately available for comment when contacted by CNBC.
Apple has maintained that its strict App Store policies are designed to protect users and improve the experience across its products.
China this week also opened a probe into Google over alleged antitrust violations, although the market regulator did not supply details over the focus of the investigation.
The Financial Times reported on Tuesday that the SAMR is also considering a probe into U.S. chipmaker Intel.
Apple’s App Store has come under scrutiny from regulators globally. It was forced to open up its App Store in Europe, under the sweeping Digital Markets Act in the EU. This means that it now allows non-Apple companies to offer app stores in Europe, and app developers can also use third-party payment systems.
If the China probe goes ahead, it would cause further headache for Apple in one of its biggest markets. The Cupertino giant is already facing stiff competition from local players like Huawei that are eating away at its smartphone market share. Apple sales in Greater China declined 11% year-on-year in the December quarter.
FILE PHOTO: The logo of Toyota is pictured in Cuautitlan Izcalli, Mexico, January 30, 2025
Raquel Cunha | Reuters
Japan’s Toyota Motor on Wednesday reported a second consecutive fall in quarterly profit, while announcing that it will set up a new company in China to make electric vehicles as it plays catch up with automakers focused on EVs.
Here are Toyota’s results compared with estimates from analysts, compiled by LSEG.
Revenue: 12.39 trillion yen vs. 12.1 trillion yen
Operating profit: 1.22 trillion yen vs. 1.39 trillion yen
The world’s largest automaker by sales volume saw anearly 28% year-on-year drop in operating profit during the quarter ended December.
The results mark Toyota’s second consecutive year over year decline in operating profit after the company saw profit fall 20% year over year in the previous quarter.
Net income attributable to the company, however, jumped to 2.19 trillion yen from 1.36 trillion yen a year ago.
The automaker’s consolidated vehicle sales for its financial third-quarter dropped to 2.44 million from 2.55 million units a year ago.
Still, Toyota maintained its full-year dividend forecast at 90 yen, compared with a dividend payout of 75 yen a year earlier.
Toyota said it will establish a wholly-owned company for the development and production of Lexus BEVs and batteries in Shanghai, China. The new company is expected to start production in 2027.
Toyota shares rose over 1% in Tokyo on Wednesday.
The companysaw its operating profit drop in the key North America region by 113.7 billion yen in the December quarter, year on year, while it declined by over 46 billion yen in Asia.
Toyota has been slower than competitors at embracing fully battery-powered electric vehicles, and instead has focused on hybrids, according to local reports.
