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Google’s $2 Billion AI Partnership with Anthropic Under UK Investigation

The UK CMA is investigating Google’s $2B partnership with AI startup Anthropic, amid concerns that it could limit competition in the fast-growing AI sector.

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On October 24, 2024, the UK’s Competition and Markets Authority (CMA) initiated a formal investigation into Google’s $2 billion partnership with AI startup Anthropic. The inquiry comes as Anthropic continues to expand rapidly, with a bold forecast of $850 million in revenue for 2024. Regulators are concerned that Google’s significant financial stake in Anthropic could hamper competition in the growing AI sector, raising alarms about potential market dominance.

Anthropic Targets $850M Revenue by End of 2024

Anthropic, founded just three years ago, has set its sights on generating $850 million in revenue by the end of 2024, a massive increase from its previous projection of $100 million. This surge in revenue expectations highlights the immense demand for generative AI, a technology that allows machines to generate human-like content.

Anthropic’s growth is powered by its Claude large language model, a powerful AI tool designed to excel in various enterprise applications. The substantial backing from Google, which includes both financial investment and cloud infrastructure, has positioned the startup as a formidable player in the AI space.

UK CMA Probes Growing AI Partnerships

Google’s collaboration with Anthropic isn’t the first AI deal to catch the attention of the UK regulator. The CMA’s inquiry follows a string of investigations into major tech firms investing in AI startups. The CMA, known for its proactive stance in preventing monopolistic practices, will decide by December 19, 2024, whether to escalate the investigation to a more detailed phase two. This comes after similar AI investments by other tech giants have faced scrutiny.

For instance, Microsoft’s investment in French AI startup Mistral AI earlier this year managed to escape a formal investigation. The CMA concluded that Microsoft’s minority stake didn’t grant the company enough influence over Mistral’s operations. However, the scale of Google’s investment in Anthropic—and its dominance in cloud services—has drawn deeper concern. This isn’t the first time Google has faced regulatory pushback over its involvement in artificial intelligence, but the Anthropic deal stands out due to its significant financial and strategic impact.

Global AI Market Faces Regulatory Pressure

Globally, regulators are increasingly keeping an eye on large-scale investments by tech giants into AI startups. In the US, the Federal Trade Commission (FTC) is investigating Google, Amazon, and Microsoft’s respective investments to assess whether these partnerships could harm competition in the fast-evolving AI landscape. Similarly, the European Commission is closely examining AI-related mergers to ensure that innovation isn’t stifled by large firms consolidating their power in the field.

Anthropic, for example, is considered one of the key players in the generative AI space, rivaling companies like OpenAI. Its Claude large language model uses advanced machine learning techniques to process and generate natural language, making it highly sought after for a wide range of business applications. With Google’s investment providing financial backing and cloud services, regulators are concerned that smaller AI firms may struggle to compete.

Amazon’s Anthropic Investment Cleared, Microsoft Still Under Scrutiny

Earlier this year, Amazon’s $4 billion investment in Anthropic was cleared by the CMA, as the regulator found the deal didn’t pose significant risks to competition in the UK. However, Microsoft’s larger investment in OpenAI continues to face scrutiny both in the UK and Europe.

The CMA and the European Commission are reviewing whether Microsoft’s close relationship with OpenAI could give it too much control over the direction of generative AI technology. Microsoft has also been involved with another startup, Inflection AI, which has similarly drawn attention from regulators concerned about the consolidation of AI innovation among a small number of companies.

SourceCMA
Luke Jones
Luke Jones
Luke has been writing about Microsoft and the wider tech industry for over 10 years. With a degree in creative and professional writing, Luke looks for the interesting spin when covering AI, Windows, Xbox, and more.

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