Amazon’s $4 billion investment in Anthropic faces UK competition probe – here’s what it means

The UK’s competition watchdog is looking into Amazon’s $4 billion investment in AI firm Anthropic, saying it may refer the deal for further investigation.

First unveiled by Amazon Web Services (AWS) in September 2023, the deal consisted of an initial $1.25 billion stake in the firm and was followed by an additional $2.7 billion, confirmed earlier this year.

As part of the deal, Anthropic committed to use Amazon Web Services (AWS) as its “primary cloud provider” for mission critical workloads, including safety research and future foundation model development.

The intention was to incorporate Anthropic’s large language models (LLMs) into Amazon’s Bedrock generative AI platform. However, the Competition and Markets Authority (CMA) said the investment has raised competition concerns.

A key factor that prompted this preliminary investigation is that the watchdog believes the partnership could have “resulted in the creation of a relevant merger situation” under the Enterprise Act 2002.

In a statement, the regulator said it will examine whether this could result in a “substantial lessening of competition within any market or markets in the United Kingdom for goods for services”.

The announcement is just the latest in a series of investigations aimed at maintaining fair competition in the AI sector, with the CMA having expressed concerns about the dominance of Google, Amazon, Microsoft, Meta, Apple, and Nvidia.

Earlier this year, the CMA announced a preliminary probe into a multi-million-dollar deal between Microsoft and French startup, Mistral AI.

The watchdog confirmed in May it had closed the investigation after acknowledging the deal was acceptable under UK law.

CMA probes into big tech sector deals have been criticized in recent months, with industry stakeholders suggesting the regulator’s approach could negatively impact confidence in the booming AI space.

Matthew Sinclair, senior director of the Computer & Communications Industry Association (CCIA), said he believes the CMA may be taking a heavy-handed approach.

“The latest CMA announcements will only prolong and exacerbate the pressures on innovative challengers in the AI foundation models sector. Months of regulatory uncertainty are a serious imposition for fast-moving businesses,” he said.

“The CMA’s novel application of merger control rules in these settings may significantly impair innovation and competition in a vital sector for the UK economy.”

There are, in fact, worldwide concerns about competition in the AI sector. Just last month, the CMA announced it was working with the European Commission, the US Department of Justice ,and the US Federal Trade Commission to monitor the sector.

All three organizations said they were concerned about concentrated control of key inputs such as specialized chips, substantial compute, data at scale, and specialist technical expertise.

Similarly, concerns were raised about industry players entrenching or extending market power in AI-related markets, and that partnerships, financial investments, and other connections between firms could make these risks worse.

The CMA will make its decision on whether to investigate further in the next 40 working days.

ITPro has approached Amazon for comment.