UK Regulators Investigate Google’s Investment in AI Startup Anthropic

In a fresh challenge for tech giant Alphabet, the parent company of Google, U.K. antitrust regulators have launched an inquiry into Google’s investment in artificial intelligence (AI) startup Anthropic. According to a report from The Wall Street Journal, the U.K.’s Competition and Markets Authority (CMA) is scrutinizing whether the partnership could stifle competition in the rapidly growing AI sector. This marks a setback for Google, which is facing heightened regulatory scrutiny on both sides of the Atlantic.

The CMA’s inquiry began with an initial review in July, and officials have now advanced it to a formal merger investigation. A decision on whether to pursue a more in-depth investigation is expected by December 19, per The Wall Street Journal. The inquiry comes in the wake of a similar case where British regulators cleared Amazon’s $4 billion investment in Anthropic without requiring a full-scale investigation.

Google’s growing investment in Anthropic, which could reach up to $2 billion, is part of the company’s broader strategy to compete with rivals like Microsoft, OpenAI and Amazon in the fiercely contested AI market. Anthropic, which was founded by former OpenAI employees, has developed an AI assistant named Claude. The startup has been positioning itself as a key player in the AI race, seeking major investments to fuel the development of its large language models. Amazon’s financial backing of Anthropic is seen as a significant move in this rivalry, bolstering the startup’s capabilities against competitors like OpenAI, the creator of ChatGPT.

The broader tech industry has seen a wave of investments in AI startups since the release of ChatGPT in 2022. Companies like Google, Microsoft and Amazon have been pouring billions into AI ventures in hopes of gaining an edge in the transformative technology. However, these high-profile deals have drawn the attention of regulators, who are concerned about the potential impact on competition.

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According to The Wall Street Journal, Google emphasized its commitment to creating an “open and innovative AI ecosystem.” The tech giant also clarified that it holds no board seats or voting rights at Anthropic, thereby having no direct influence over the startup’s strategic decisions. Nevertheless, regulators appear cautious about the growing entanglement between Big Tech and smaller AI companies.

This inquiry comes on the heels of a similar investigation by the U.S. Federal Trade Commission (FTC), which earlier this year began probing the partnerships and investments in AI startups by companies like Alphabet, Amazon, Microsoft, OpenAI and Anthropic. The FTC’s inquiry seeks to uncover whether these collaborations are contributing to an anti-competitive environment within the burgeoning AI sector.

As regulators worldwide focus on the implications of Big Tech’s forays into AI, the U.K. inquiry signals that no partnership is immune from scrutiny. Google and other tech giants remain under pressure to demonstrate that their investments are not hindering innovation or market competition.

Anthropic has not yet responded to requests for comment on the CMA’s investigation.

Source: The Wall Street Journal