Google increases investment in Anthropic by another $1 billion

Google is making a fresh investment of more than $1 billion into OpenAI rival Anthropic, boosting its position in the start-up as Silicon Valley titans rush to develop cutting-edge artificial intelligence systems.

The Alphabet-owned search behemoth had already committed about $2 billion to Anthropic and was now increasing its stake in the group, according to four people with knowledge of the situation.

Anthropic, best known for its Claude family of AI models, is one of the leading start-ups in the new wave of generative AI companies building tools to generate text, images, and code in response to user prompts.

Google invented the technology on which models such as Claude and OpenAI’s GPT4 are built, but it has lagged behind in the race to commercialize the powerful technology. The Anthropic investment is part of the Silicon Valley company’s efforts to diversify its AI business and take on deep-pocketed competitors, including Microsoft, Meta, and Amazon.

Anthropic was also on the cusp of securing a further $2 billion from Silicon Valley venture capital investors, 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 a fierce competition with rivals OpenAI and Elon Musk’s xAI, both of which raised more than $10 billion last year, as well as Facebook parent Meta and Microsoft.

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The new tranche of money from Google into Anthropic adds to a total investment of $8 billion from Amazon, the ecommerce group’s largest-ever venture investment, announced over the past 18 months. Amazon is also working to embed the Claude models into the next-generation version of its Alexa speaker.

The close relationships between AI start-ups and their Big Tech backers were probed by the Federal Trade Commission during Joe Biden’s administration.

Under outgoing commissioner Lina Khan, the FTC had targeted investments from Google and Amazon into Anthropic and Microsoft’s partnership with OpenAI, reviewing the impact of the deals on competition in the nascent sector. But with Khan stepping down in the coming weeks, dealmakers are growing more confident in their ability to forge tie-ups.

Anthropic’s revenue hit an annualized $1 billion in December, up roughly 10 times on a year earlier, according to a person with knowledge of the company’s finances.

Nonetheless, investors are not anticipating that Anthropic or its rivals will be profitable in the near future, given the steep costs of developing leading AI models. With new breakthroughs, they believe the technology could ultimately create trillions of dollars in value.

“Right now I’m more confident than I have been at any previous time that we are very close to powerful capabilities... AI systems that are better than almost all humans at almost all tasks,” Anthropic chief executive Dario Amodei said in an interview with CNBC on Tuesday.

Anthropic, founded in 2021 by a group of former OpenAI employees, has sought to differentiate itself from its rivals by focusing on AI safety. It has poached multiple staff from OpenAI in recent months, including a co-founder of the company.

The group was also first to release certain features, such as the ability for its AI to control computers, and is focused this year, alongside rivals, on creating AI agents—software that can complete tasks and navigate the web on behalf of human users.