The UK Investigates Amazon’s Partnership with Anthropic

When is an investment just a buyout? It’s not just an etymological question, and the answer could impact two major US tech companies. 

The UK’s Competition and Markets Authority announced on Thursday that it’s probing whether Amazon’s $4 billion partnership with AI startup Anthropic breaks antitrust rules. Amazon and Anthropic are both US companies, so it might seem odd for a UK watchdog to be taking an interest, but the CMA has a history of forcing Silicon Valley companies to unwind acquisitions. 

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To tap into the generative AI furor, Big Tech companies often team up with, or acquire, an AI startup. Microsoft has its relationship with OpenAI — plus, it’s partnered with French AI startup Mistral. Amazon and Google both invested billions to create partnerships with Anthropic, and Google’s part in that equation is already the subject of a CMA investigation.

The deals and partnerships allow Big Tech companies to leapfrog into the AI race, but now antitrust regulators are poking into whether they’re really just mergers in disguise: 

• Both the UK’s CMA and the US’ Federal Trade Commission are investigating Microsoft’s relationship with startup Inflection AI: The giant paid Inflection a $650 million licensing fee before hiring most of its staff.
• Amazon’s and Microsoft’s roles in the cloud computing market make them particularly exposed to antitrust scrutiny, as many startups rely on the infrastructure.

“One important aspect of the investigation is likely to be potential harms to competition that arise from the relationship between the two firms as [potential] supplier and customer,” Greg Taylor, associate professor at the Oxford Internet Institute, told The Daily Upside. “For example, might Amazon give Anthropic advantaged access to its cloud computing infrastructure, or to data held by Amazon in a way that makes it difficult for other AI firms to compete?”

He added that the US, EU, and UK have all recently brought in new rules on mergers to heighten the scrutiny of large digital firms. “More specifically, the CMA has made a commitment to increase scrutiny of AI foundation model mergers,” he added.

Generative Movers and Shakers: The CMA’s investigation comes the same week that Anthropic managed to coax one of OpenAI’s top execs over to its side: namely, co-founder John Schulman. Schulman is the latest OpenAI executive to leave this year, amid a leadership exodus that threatens to shake the company’s pole position in the generative AI hype race.