UK Antitrust Regulators Start Probe into Amazon’s Partnership with Anthropic

• On Thursday, the UK's antitrust regulators, the Competition and Markets Authority, announced that it's gearing up for a phase 1" investigation on Amazon's recent investment in Anthropic.
• The tech giant invested $4 billion in the AI startup in a deal that was finalized this March.
• Amazon is unhappy with the investigation and a spokesperson for the company said that the merger does not violate any antitrust regulations.

Amazon's merger with AI firm Anthropic might be in danger, as the UK's antitrust regulator just confirmed that they have launched a formation investigation into the deal.

The news came on Thursday directly from the Competition and Markets Authority (CMA). They said a phase 1" investigation has been launched into this merger.

How Does the Process Work?

The CMA first conducted an initial scrutiny," during which it collected all the data that it'll need to carry out a formal investigation.

Now, in the phase 1," or first phase, the regulatory body will have 40 working days to decide whether this partnership might decrease competition in the UK market.

If the answer is yes (i.e., if the merger is indeed anti-competition), then a more detailed phase 2" investigation will be launched into the deal.

Read more: US FCC probes Amazon for allegedly marketing illegal signal jammers

About the Amazon-Anthropic Deal

The deal was finalized this March and cost Amazon $4 billion in total, i.e., a $1.25 billion equity stake in September 2023 and then an additional $2.75 billion investment that was finalized earlier this year.

As part of the deal, all upcoming Anthropic models will be trained and deployed on Amazon's own custom AI chips, built by Amazon Web Services.

In return, Amazon will add Anthropic's large language models to its Bedrock platform for building generative AI applications.

What Does Amazon Have to Say about This Investigation?

Amazon's spokesperson made an official statement saying that they're disappointed with the investigation because the merger neither hampers competition in the UK nor meets the CMA's threshold to even trigger such a review.

Instead, by investing in Anthropic, Amazon is helping it expand its choices, which in turn will increase competition. Since Amazon doesn't have a seat on the Anthropic board, it has no power over the decisions it makes.

This means that Anthropic will be able to work with any partner it wants and get a good shot at competing with industry leaders, such as OpenAI.

Also, experts feel that Amazon should not take this investigation personally because it isn't the only business development the CMA is investigating at the moment.

The agency also has its eyes on Microsoft's multibillion-dollar partnership with OpenAI, and a full-fledged probe is already in the works there. It's also well worth noting that Google's investment in Anthropic is also under scrutiny.

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