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The AI proxy battle intensifies as Google allegedly supports Anthropic with a $2 billion investment.

ByYasmeeta Oon

Oct 31, 2023

The AI proxy battle intensifies as Google allegedly supports Anthropic with a $2 billion investment.

Google has reportedly poured a staggering $2 billion into Anthropic, aligning itself with OpenAI as a dominant force in the artificial intelligence realm. In a landscape where tech giants struggle to keep pace, they are channeling colossal sums toward these AI leaders. It encapsulates a contemporary maxim: those with the capability create, while those lacking it invest.

The funding agreement, as per insider sources cited by The Wall Street Journal, entails an initial injection of $500 million, with the potential for an additional $1.5 billion down the road, though the specifics regarding timing and conditions remain hazy. We have reached out to Anthropic for their perspective on this development.

This development may evoke Microsoft’s substantial investment in OpenAI earlier in the year, yet Amazon’s commitment to Anthropic, potentially amounting to $4 billion, makes the funding disparity seem more theoretical than practical.

The investment from Google is but the latest salvo in an ongoing proxy war among rival companies vying for the limited champions in this domain. While these entities wield substantial technological prowess, none possess the capacity to rival OpenAI or Anthropic in the large language models domain. Given the pivotal role these models are expected to play in reshaping business models and future tech platforms, they cannot afford to lack partial ownership of the sector’s leaders.

Beyond financial contributions, the deals also involve considerations like compute credits and collaborative support. However, it would be imprudent for these companies to exclusively invest in a single entity and simultaneously become its customers. Thankfully, a select few organizations merit investment, with OpenAI and Anthropic emerging as the frontrunners.

In the words of Anthropic’s spokesperson, “We’ve only been around for a little over two and a half years… in that time, we’ve managed to raise $1.5 billion, which is a lot. Our team is much smaller, and yet we’ve managed to hold our own. We have really, very radically been able to do more with less. And I think relatively soon, we’re going to be in a position to do more with more.”

This aligns with the strategic blueprint revealed in internal documents leaked to TechCrunch back in April: amassing $5 billion or more to directly challenge OpenAI.

Anthropic has gleaned insights from observing other AI companies, recognizing the value of specializing in enterprise solutions, which may be less alluring to the average consumer but hold promise as a sustainable business model, particularly in knowledge work and professional services.

Safety and transparency are focal points for Anthropic, catering to corporate clients who require comprehensive insights into the AI systems they are adopting and using, vital for shareholders and regulatory compliance.

As for the multi-billion-dollar investments, these models are reported to be astronomically expensive to train, deploy, and maintain. Once a company manages to streamline the technology to a point where it costs less than a dime per query, the game evolves, necessitating the development of more advanced models. OpenAI’s decision to offer its product for free is deemed cost-intensive, and while Anthropic has exercised more prudence in this regard, there remains a substantial disparity between costs and revenues.

Internal documents from Anthropic suggest that they anticipate spending a billion dollars by the end of 2024 to build their next-generation model, “Claude-Next.”

The more substantial the financial commitment, the stronger the position for Anthropic and its well-funded counterparts. Until Google, Microsoft, Amazon, and other contenders can independently stand their ground in this domain— an endeavor that may prove elusive— they are compelled to wage a proxy war by injecting billions into nurturing innovation within the sector.

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.