UK regulators launch investigation into Amazon’s anthropic partnership

The UK’s Competition and Markets Authority announced on Thursday that it is preparing for the “first phase” of an investigation into Amazon’s recent investment in Anthropic.

The tech giant invested $4 billion in the artificial intelligence startup, with the deal finalized in March this year.

Amazon is not pleased with the investigation, and a company spokesman said the merger does not violate any antitrust laws.

Amazon’s merger with artificial intelligence company Anthropic could be in jeopardy, as the UK’s antitrust watchdog has just confirmed it has opened an investigation into the deal.

The news came directly from the Competition and Markets Authority (CMA) on Thursday, saying it had launched a “Phase 1” investigation into the merger.

How does this process work?

The CMA first carried out an “initial check” during which it collected all the information needed to conduct a formal investigation.

Now, in “Phase 1”, the first phase, the regulator will have 40 working days to decide whether the partnership could reduce competition in the UK market.

If the answer is yes (that is, if the merger is indeed anti-competitive), then a more detailed “Phase 2” investigation will be conducted into the transaction.

Read more:US FCC investigates Amazon for allegedly marketing illegal signal jamming devices

About the Amazon-Anthropic deal

The transaction was finalized in March this year and cost Amazon a total of $4 billioni.e. $1.25 billion of equity participation in September 2023, followed by an additional $2.75 billion investment completed earlier this year.

Under the agreement, all new Anthropic models will be trained and deployed on Amazon’s own custom AI chips, developed by Amazon Web Services.

In return, Amazon will add Anthropic’s extensive language models to its Bedrock platform to enable the creation of generative AI applications.

What does Amazon have to say about this investigation?

An Amazon spokesperson issued an official statement saying that disappointed with the investigation because the merger does not restrict competition in the UK and does not meet the CMA’s requirements to justify initiating such a review.

Instead, by investing in Anthropic, Amazon is helping it expand its selection, which in turn will increase competition. Because Amazon has no seat on Anthropic’s board, it has no power over the decisions it makes.

This means Anthropic will be able to work with any partner it wants and have a chance to compete with industry leaders like OpenAI.

Experts also believe that Amazon should not take this investigation personally because this is not the only business development the CMA is currently investigating.

The agency also has its eye on Microsoft’s multibillion-dollar partnership with OpenAI, with a full-fledged investigation already underway. It’s also worth noting that Google’s investment in Anthropic is also under scrutiny.

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