The UK government has completed its investigation into the partnership between Amazon and Anthropic and found that it does not create a “relevant merger situation” that would protect it from competition.
Although it gives Amazon certain rights and involves cooperation between the two companies, the merger meets the criteria for a relevant merger under UK law, according to the Competition and Markets Authority.
Specifically, the partnership does not meet the sales threshold for the relevant merger case, as Anthropic has a turnover of less than £70 million, according to Decision summary. Also, the two companies together do not control 25% or more of any market in the country, so they do not pose a significant threat to competition.
As a result, the CMA decided that Amazon had no material influence on Anthropic and not to refer the partnership for further investigation.
In March, Amazon concluded its agreement A $4 billion (£3.16 billion) investment. At Anthropic, the company behind the Claude LLM family, it is among the only viable competitors to OpenAI’s ChatGPT and Google’s Gemini. It was founded by former OpenAI employees, including siblings Daniela and Dario Amodei, both of whom were executives.
In exchange for the investment, Anthropic committed to using Amazon Web Services as its primary cloud provider for “critical workloads, including safety research and future foundation model development.” It has also agreed to use Amazon’s Trainium and Inferentia chips to build, train, deploy and host its models on the Amazon Bedrock AI application development platform.
However, the Competition and Markets Authority suspected that this partnership could have resulted in a “significant reduction in competition” within the UK technology markets, so it opened an investigation.
SEE: UK regulator checks Microsoft and Inflection AI appointments over ‘merger status’
“We welcome the CMA’s decision to end its review of Amazon’s investments without taking further action,” an Anthropic spokesperson told TechRepublic in an emailed statement.
“As we have made clear, Anthropic is an independent company and our strategic partnerships and investor relationships do not diminish the independence of our corporate governance or our freedom to partner with others.”
TechRepublic has reached out to Amazon for comment.
When the investigation was opened, an Amazon spokesperson told TechRepublic in an email statement: “We are disappointed that the UK Competition and Markets Authority (CMA) has not yet concluded its investigation. Amazon’s collaboration with Anthropic does not raise any competition concerns and does not meet the threshold for Special Capital Market Authority for review.
“The early days of generative AI were largely seen as a successful option available to customers. Anthropic has worked hard to become a viable emerging alternative. But building models is expensive, and companies like Anthropic need access to a significant amount of capital to train these models. By investing At Anthropic, Amazon, along with other companies, is helping Anthropic expand choice and competition in this important technology.
“Amazon does not have a board seat or decision-making power at Anthropic, and Anthropic is free to work with any other provider (and already has multiple partners). Amazon will also continue to make these human models available to customers via Amazon Bedrock, a service that makes it easier for developers and businesses to take advantage of From large language models (LLMs) and building generative AI applications.
Other CMA investigations
In July, the CMA launched an ongoing investigation into the partnership that Alphabet, Google’s parent company, began with Anthropic. Google agreed Invest up to $2 billion In the safety and artificial intelligence research startup in October and also Got a 10% stake In exchange for an injection of $300 million starting in late 2022.
Microsoft was also in the hot seat, but government authority has now allowed the appointment of Inflection AI co-founder Mustafa Suleiman and…numerous“Co-workers of competition concerns, although it is considered a relevant merger situation.
The CMA is also still looking into whether the connections between Microsoft and OpenAI open up the possibility of a merger, which could impact competition.
See: Capital Market Authority (CMA) to audit Microsoft and other cloud providers in the UK
Capital Markets Authority She concluded her investigations Microsoft Azure partnered with French AI startup Mistral in May, which included the tech giant taking a minority stake in exchange for hosting all of Mistral’s LLM software on Azure. It was determined that the deal would not significantly reduce competition or harm consumers.
Why is the Capital Markets Authority investigating big technology companies?
Big tech companies are rapidly investing in emerging AI startups in order to gain early control and benefit from the AI boom. Notably, this can be seen through partnerships such as Microsoft and OpenAI, NVIDIA Inflection AIand Google and Anthropy.
However, such collaborations can lead to market dominance, making it more difficult for other independent companies to obtain financing, attract talent, or compete with advanced technology and access to larger players.
Complete mergers and acquisitions often trigger extensive regulatory scrutiny and potential antitrust proceedings for this reason, which can delay or impede proceedings. To avoid this situation, big tech companies instead make strategic investments in promising startups and hire their best talent, allowing them to gain influence and access to innovative technologies unchecked.
In an April report on How the CMA views the foundational models of AIThe CMA said: “Without fair, open and effective competition and strong consumer protection, underpinned by these principles, we see a real risk that the full potential of organizations or individuals to use AI to innovate and disrupt will not be realized, and its benefits will not be widely shared across the world.” the society.
“That is why we have established fundamental principles that we consider crucial to protecting those circumstances. It is essential that competition agencies work with market participants and other interested stakeholders to shape these positive outcomes.”
SEE: Delaying UK AI deployment by five years could cost economy more than £150bn, according to Microsoft report
The CMA is looking to identify “relevant merger status(s)” that would allow big tech companies to “protect themselves from competition” in the UK. It says “a range of different types of transactions and arrangements” could represent a suitable merger with the UK. Provisions Corporations Law 2002.
The draft Digital Markets, Competition and Consumer Law passed in May also “anticipates new powers for the Capital Markets Authority.” According to the April report, the CMA is able to “enforce the consumer protection law against violating companies” and impose non-compliance penalties of up to 10% of a company’s total sales worldwide.
“We stand ready to use these new powers to raise standards in the market and, if necessary, to deal with companies that do not adhere to the rules through enforcement action,” she added.
Furthermore, in July the CMA issued a joint statement with the European Commission, the US Department of Justice, and the US Federal Trade Commission, in which they committed to studying whether the AI industry allows for sufficient competition.