UK investigates Amazon’s partnership with Anthropic

When is an investment simply a buyout? This is not just an etymological question, and the answer could have implications for two major American technology companies.

The U.K. Competition and Markets Authority announced Thursday that it is investigating whether Amazon’s $4 billion partnership with AI startup Anthropic violates antitrust laws. Amazon and Anthropic are both U.S. companies, so it may seem odd that the U.K. watchdog would be interested in them, but the CMA has a history of forcing Silicon Valley companies to back down from acquisitions.

Choose your horses

To capitalize on the generative AI craze, big tech companies are often teaming up with or acquiring AI startups. Microsoft has a relationship with OpenAI — and is also working with French AI startup Mistral. Amazon and Google have invested billions to form partnerships with Anthropic, and Google’s role in that equation is already under investigation by the CMA.

Deals and partnerships are allowing big tech companies to jump into the AI ​​race, but now antitrust regulators are investigating whether they are actually just mergers in disguise:

• Both the UK CMA and the US Federal Trade Commission are investigating Microsoft’s ties to AI startup Inflection: the giant paid Inflection a $650 million license fee before hiring most of its staff.
• Amazon and Microsoft’s role in the cloud computing market makes them particularly vulnerable to antitrust scrutiny because many startups rely on this infrastructure.

“One important aspect of the investigation is likely to be the potential harm to competition resulting from the relationship between the two companies as (potential) supplier and customer,” Greg Taylor, an associate professor at the Oxford Internet Institute, told The Daily Upside. “For example, could Amazon give Anthropic privileged access to its cloud computing infrastructure or to data stored by Amazon in a way that would make it harder for other AI companies to compete?”

He added that the US, EU and UK have recently introduced new merger rules to increase scrutiny of large digital companies. “More specifically, the CMA has committed to increasing scrutiny of AI foundation model mergers,” he added.

Creators and Generative Leaders: The CMA investigation comes the same week that Anthropic managed to persuade a top OpenAI executive to defect to its side: co-founder John Schulman. Schulman is the latest OpenAI executive to depart this year, in a leadership exodus that threatens to shake the company’s place in the generative AI hype race.