UK Competition Watchdog Greenlights Google’s $2 Billion Anthropic AI Deal

A futuristic road with a green traffic light.

Britain’s competition watchdog has given Google the green light to invest $2 billion in rival AI startup Anthropic, allowing it to escape an in-depth antitrust investigation amid growing scrutiny of Big Tech’s sprawling investments and partnerships in the fast-moving AI space

The Competition and Markets Authority (CMA) said Google parent Alphabet had not gained “material influence” over Anthropic when the tech giant pledged to invest an additional $2 billion into the startup last year. The infusion adds to Google’s existing $300 million investment into the California firm and a large cloud computing contract.

The deal raised fears that Google could stifle competition in the fast-moving AI sector. San Francisco-based Anthropic, a public benefit corporation, is one of the world’s leading large language model (LLM) developers best known for its line of Claude models and chatbot. In terms of products and research, Anthropic is a significant and direct competitor to Google and its line of Gemini models and chatbot. 

Concerns Mount Over Big Tech’s “Interconnected Web” Of AI Investments

Regulators like the CMA and US Federal Trade Commission have repeatedly expressed concerns over the “interconnected web” of investments and partnerships in the AI ecosystem involving the same firms. The CMA identified tech titans Google, Apple, Microsoft, Meta, Amazon, and chipmaker NVIDIA as particular threats to competition on account of the “huge wealth of resources, expertise and innovation capability… (they) can bring to bear.”

The CMA announced a preliminary investigation into Alphabet’s dealings with Anthropic in October to determine whether the partnership merited a fully fledged merger probe, which can lead to regulatory action. 

In its decision, the watchdog said it considered whether the pair’s relationship meant Google could exercise influence over Anthropic’s shareholders and board and whether the startup’s technical reliance on the tech giant’s computing services could potentially hinder competition. It also said it examined a “significant” trove of internal document to see if Google could exert influence in “other unspecified ways” and said available evidence indicated it could not. 

The ruling also found Anthropic’s commercial structure means the company’s turnover does not exceed the £70 million jurisdictional threshold for UK merger controls.  

Regulators Wrestle With Big Tech’s AI Dominance

The decision is the latest of several partnerships between big tech firms and AI startups the CMA has waved through this year. It issued a similar decision about Amazon’s $4 billion investment in Anthropic in September, declining to investigate as Anthropic failed to clear the £70 million turnover hurdle used to justify further scrutiny. It also greenlit Microsoft’s acqui-hire of Inflection, as well as the company’s partnership with French startup Mistral, and has an ongoing investigation into Microsoft’s partnership with OpenAI.

Despite their approval, the deals highlight a key challenge for regulators navigating the new era of interconnected AI investments: how to handle investments in startups that compete directly with their backers and on whom they rely for key services.

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