The U.K.’s antitrust regulator has revealed an early-stage probe into Google’s ties with Anthropic, after the Alphabet subsidiary invested in its U.S. AI rival over several rounds.
While it’s not at the stage of being an official investigation yet, the Competition and Markets Authority (CMA) is inviting stakeholders and other “interested parties” to comment ahead of a final decision on whether the partnership “has resulted in the creation of a relevant merger situation” and if this will lead to a “substantial lessening of competition” in the U.K.
Founded out of San Francisco in 2021, Anthropic develops AI systems with a stated focus on safety, transparency, and risk-mitigation, establishing itself as a public benefit corporation (PBC) to set itself apart from its rivals. Anthropic develops large language models (LLMs) and an associated chatbot called Claude, which is comparable to something like OpenAI’s ChatGPT or Google’s Bard.
Anthropic has raised nearly $10 billion in funding since its inception, with Google first investing a reported $300 million early last year followed by another reported $2 billion. Beyond that, Anthropic has been courting other big-name investors, including Amazon, which plowed $4 billion into the fledgling AI startup.
All this activity has spurred regulators into action, with concerns that big tech companies are adopting a new M&A approach designed to give them some control over younger innovators without attracting the regulatory scrutiny that a full-fledged acquisition might. This so-called “quasi-merger” may involve hiring startup founders and technical talent, or making strategic investments.
Investigations
The CMA revealed in April that it was carrying out enquiries into several such deals, including Microsoft’s recent investment in French startup Mistral AI, though it soon concluded that this didn’t qualify for investigation under current merger regulations due to the size of the investment. The CMA is also looking at Amazon’s Anthropic’s ties, while separately it’s also expected to launch a full-scale probe into Microsoft’s close partnership with ChatGPT-maker OpenAI.
Earlier this month, the CMA also confirmed that it’s launching a full regulatory probe into Microsoft after it hired the core team behind OpenAI rival Inflection AI, a company that Microsoft had previously invested in.
From today, any interested party has until August 13, 2024 to provide the CMA with comment, but there is no guarantee that the regulator will progress matters to a formal “phase 1” investigation. This decision could ultimately hinge on the stake that Google has procured in the startup — if it’s deemed to be a minority investment that doesn’t give Google any material control over the startup, then the CMA might do as it did with Microsoft’s investment into Mistral AI and throw it out.
“We intend to cooperate with the CMA and provide them with the complete picture about Google’s investment and our commercial collaboration,” an Anthropic spokesperson said in a statement sent to TechCrunch. “We are an independent company and none of our strategic partnerships or investor relationships diminish the independence of our corporate governance or our freedom to partner with others. Anthropic’s independence is a core attribute — integral both to our public benefit mission and to serving our customers wherever and however they prefer to access Claude.”
A Google spokesperson added that it’s “committed to building the most open and innovative AI ecosystem in the world,” and that it doesn’t demand that Anthropic use Google Cloud as part of its deal.
“Anthropic is free to use multiple cloud providers and does, and we don’t demand exclusive tech rights,” the spokesperson said.
