Amazon’s $4 billion investment in Anthropic may violate antitrust law

As the AI ​​race heats up, antitrust regulators around the world are increasingly concerned that lucrative deals struck in recent years between Big Tech companies and generative AI startups could harm competition. The latest development in the spotlight is Amazon’s (AMZN) $4 billion investment in Anthropic, a leading AI startup. The UK’s Competition and Markets Authority (CMA) said today (August 8) that it will formally investigate the partnership to determine whether the combination constitutes a de facto merger. The CMA says it has “sufficient information” to begin a “Phase 1” investigation into whether the Amazon-Anthropic partnership created a merger situation. It will have until October 4 to decide whether it believes the investigation should continue as a more detailed “Phase 2” investigation.

In a statement, Amazon said it was “disappointed” by the CMA’s decision and maintained that “our partnership with Anthropic does not raise any competition concerns.” The e-commerce giant argued that startups like Anthropic need capital to fund the development of AI models. “By investing in Anthropic, Amazon, along with other companies, is helping Anthropic expand choice and competition in this important technology,” it said.

Anthropic, meanwhile, stressed that Amazon does not have any board seats or board observer rights in the AI ​​company — a common arrangement in a traditional corporate merger. “Our strategic partnerships and investor relationships do not impair our independence in corporate governance or our freedom to partner with others,” Anthropic said in a statement, adding that it plans to work with the CMA.

Amazon first invested $1.25 billion in Anthropic in September last year, followed by another $2.75 billion in March. In addition to giving Amazon a minority stake in the AI ​​company, Anthropic, under the agreement, will use Amazon Web Services (AWS) as its primary cloud provider and will train and deploy future models using AWS AI chips.

A Study of Big Tech’s Investment in AI

The CMA’s investigation into Amazon-Anthropic follows a nearly identical probe launched last month into Anthropic’s ties to Google (GOOGL), which invested $2 billion in the startup. In July, the competition watchdog also opened an investigation into Microsoft’s (MSFT) ties to AI startup Inflection AI, specifically looking into the tech giant’s hiring of Inflection AI employees such as co-founder Mustafa Suleyman.

Microsoft is additionally involved in perhaps the most high-profile deal in Big Tech and AI, investing a staggering $13 billion in OpenAI. The CMA is currently investigating Microsoft’s ties to OpenAI, but has not yet formally announced a “Phase 1” investigation into the merger. In light of the heightened regulatory scrutiny over its ties to OpenAI, Microsoft withdrew from its silent board seat at the AI ​​company in July. Microsoft and OpenAI’s recent board partner, Apple (AAPL), which was expected to take on a similar board role, will instead meet regularly with the startup to stay abreast of developments.

Such competition regulation isn’t unique to Europe. Earlier this year, the US Federal Trade Commission (FTC) announced it would also investigate the impact of Big Tech’s investments in AI companies, ordering Amazon, Anthropic, Microsoft, OpenAI and Google to share information about their various partnerships.