Big Tech companies use cloud computing arms to pursue alliances with AI groups

By | February 6, 2023
Abstract illustration of a cloud

Big Tech companies are aggressively pursuing investments and alliances with artificial intelligence startups through their cloud computing arms, raising regulatory questions over their role as both suppliers and competitors in the battle to develop “generative AI.”

Google’s recent $300 million bet on San Francisco-based Anthropic is the latest in a string of cloud-related partnerships struck between nascent AI groups and the world’s biggest technology companies.

Anthropic is part of a new wave of young companies developing generative AI systems, sophisticated computer programs that can parse and write text and create art in seconds, that are rivaling those being built in-house by far larger companies such as Google and Amazon.

The technology behind products including OpenAI’s ChatGPT, a chatbot that can converse with users through text, requires enormous amounts of computing power—expensive infrastructure controlled by the same handful of tech giants.

“[This] is exactly the type of scenario that the Federal Trade Commission has said they’re going to focus on,” said William Kovacic, a former Republican chair of the US antitrust agency and a professor of antitrust law at George Washington University.

“There is a heightened concern about how the large information services firms are limiting opportunities for new generations of competitors to come forward,” he said, adding that they would probably be paying a “great deal of attention” to these deals. The FTC declined to comment.

These partnerships give the owners of the cloud insight into the talent and technology inside startups, while allowing the smaller companies to sidestep the vast capital investments that would otherwise be necessary to build their own data infrastructure. AI startups that need to train models have little choice but to rush into the arms of large companies offering essential cloud computing at discounted rates and access to the large amounts of capital they need.

“Clouds love lock-in, they force people into massive multi-year commitments,” said Jonathan Frankle, co-founder of MosaicML, an AI company that is trying to commoditize the cloud for its corporate clients that need AI models.

After the Financial Times first reported the Google-Anthropic investment gave the search giant a 10 percent stake in the company, the two companies announced a separate cloud partnership.

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