Five years ago, OpenAI approached Amazon with a proposal for collaboration, only to be turned down. OpenAI then sought partnership with Microsoft, which subsequently led the generative AI wave.

Now, Amazon, having missed that initial opportunity, is making a hefty investment to align with Anthropic, OpenAI's primary competitor.

On Monday, reports revealed that Amazon is investing up to $4 billion in Anthropic and announced plans for broader collaboration in the future to compete in the AI sector against growing rivals.

Through its investment and deeper collaboration with Anthropic, Amazon aims to unleash the potential of its in-house AI chips.

Amazon's Big Bet on Anthropic

As part of the deal, Anthropic will utilize AWS Trainium and Inferentia chips to build, train, and deploy its upcoming foundational models.

Moreover, Anthropic plans to run most of its workloads on AWS, further leveraging the advanced technology of the world's leading cloud provider.

Amazon will also benefit from this partnership. Anthropic will grant AWS customers access to its next-generation foundational models via Amazon Bedrock, AWS's fully managed service that offers secure access to top-tier foundational models.

Amazon developers and engineers will be able to use Anthropic models through Bedrock, integrating them into their operations, providing robust support for Amazon's AI advancements.

Both companies stated in a joint release that Amazon will hold a minority stake in Anthropic, with the valuation yet to be determined.

Investing to Win Clients and Boost AI Chips

Amazon has long invested in sectors like shipping, e-commerce, and electric trucks. However, its nearly $4 billion investment in Anthropic marks its largest AI-related investment to date.

While AWS is the world's largest data storage and cloud computing service provider, it's generally perceived as lagging in the AI domain, especially in training generative models for text and images. This is because it lacks popular products and high-profile exclusive partners.

Five years ago, Amazon missed the chance to collaborate with OpenAI. Now, Anthropic, seen as OpenAI's strongest competitor, has launched Claude, a model used for summarizing, searching, answering questions, and coding. In terms of performance, Claude rivals GPT-4. To date, Anthropic has raised a total of $1.45 billion, with a valuation exceeding $4 billion.

With its partnership with Anthropic, Amazon aims to "buy clients" and accelerate the development of its AI chips.

On one hand, most AI applications rely on NVIDIA's expensive chips. AWS's accelerator chips, Trainium and Inferentia, can also reduce the costs of training models and running inferences. Anthropic has stated it will use AWS chips for model construction and training.

On the other hand, AWS prefers to build its products rather than rely on technology or businesses purchased from other companies. Amazon has said its engineers, including those outside AWS, will be able to use Anthropic's models.

It's worth noting that Anthropic previously received a $400 million investment from Google and has collaborated with several cloud computing companies, distinguishing it from OpenAI's exclusive partnership with Microsoft.

Amazon executives have stated that generative AI is still in its early stages, with over 100,000 customers currently using AWS's machine learning services. Claude, as part of Amazon's "Bedrock" service, will offer customers both Amazon and third-party models, undoubtedly giving AWS a competitive edge.

This year, Google, Microsoft, AWS, Oracle, and NVIDIA have all strategically invested to secure clients. NVIDIA, in particular, has heavily invested in several AI unicorns, aiming to create the strongest AI ecosystem.