UK regulator investigates Amazon’s $4 billion investment in AI firm Anthropic

The Competition and Markets Authority (CMA) has launched a formal investigation into Amazon’s multibillion-dollar investment in the US artificial intelligence firm Anthropic.

The probe aims to determine whether the partnership could potentially harm competition in the UK. The CMA announced on Thursday that it has initiated a “Phase 1” investigation to assess if the Amazon-Anthropic deal constitutes a relevant merger situation that may negatively impact the competitive landscape.

Initial findings prompt formal investigation

Following preliminary scrutiny, the CMA concluded that it has gathered sufficient information to commence a formal inquiry into the Amazon-Anthropic alliance. The regulator’s notice on its website indicates that it now has up to 40 working days to decide whether the transaction warrants a deeper, “Phase 2” investigation.

This step will determine if the deal could indeed harm competition and, if so, what measures might be necessary to mitigate such effects.

Details of Amazon’s investment in Anthropic

Amazon completed its $4 billion investment in Anthropic in March. The deal, finalised over two stages, included an initial $1.25 billion equity stake acquired in September, followed by an additional $2.75 billion transaction earlier this year.

As part of the agreement, Anthropic’s advanced large language models will be integrated into Amazon’s Bedrock platform, which is used for developing generative AI applications. These models will be trained and deployed on Amazon’s custom AI chips, developed by its Amazon Web Services (AWS) cloud computing division.

Amazon and Anthropic’s responses to the investigation

In response to the CMA’s decision to proceed with an initial Phase 1 merger probe, an Amazon spokesperson expressed disappointment. The spokesperson emphasised that the collaboration with Anthropic does not raise any competition concerns or meet the CMA’s threshold for review.

Amazon highlighted its role in expanding choice and competition within the technology sector through its investment in Anthropic. They also noted that Amazon holds no board seat or decision-making power at Anthropic, which retains the freedom to partner with other providers.

Anthropic echoed Amazon’s sentiments, reaffirming its independence as a company. An Anthropic spokesperson stated that the firm’s strategic partnerships and investor relationships do not compromise its corporate governance or freedom to collaborate with others.

The spokesperson welcomed the opportunity to cooperate with the CMA and provide a comprehensive understanding of Amazon’s investment and their commercial collaboration.

Broader context of regulatory scrutiny

The Amazon-Anthropic partnership is not the only deal under the CMA’s scrutiny. The regulator is also examining the multibillion-dollar partnership between US software giant Microsoft and AI leader OpenAI. The CMA has yet to announce whether it will launch a Phase 1 investigation into the Microsoft-OpenAI deal.

In the United States, the Federal Trade Commission (FTC) has also shown interest in recent investments and partnerships within the tech sector. In January, the FTC issued orders to major technology companies, including Microsoft, Amazon, and Google, as well as AI firms like OpenAI and Anthropic, requiring them to disclose information about their recent collaborations and investments.

This move underscores a growing regulatory focus on the implications of significant investments and partnerships in the rapidly evolving field of artificial intelligence.

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