Amazon faces UK merger probe over $4b Anthropic AI investment

The United Kingdom’s Competition and Markets Authority (CMA) is formally investigating Amazon’s $4 billion investment in the artificial intelligence (AI) research company Anthropic. The probe, which started on August 8, will look into whether this partnership represents an anti-competitive merger.

Beginning on August 9, the CMA’s “phase 1” investigation will examine whether Amazon’s minority ownership and exclusivity arrangements with Anthropic breach UK competition laws. A decision on whether to proceed to a more in-depth “phase 2” inquiry will be made by October 4.

UK authorities probe big tech’s AI deals

Anthropic and Amazon face scrutiny from the regulator along with other AI companies invested in by major technology companies. UK watchdogs are also probing Microsoft’s partnerships with Mistral AI and OpenAI. Such joint ventures are being examined to determine if they could stifle competition and breach EU regulations.

Documents revealed by the CMA in April showed that regulators were concerned about whether Amazon’s $4bn investment into Anthropic and related exclusivity agreements could be anti-competitive. The question at the heart of the issue is whether or not these arrangements unreasonably induce Anthropic to use only Amazon Web Services, thus limiting choice.

In recent years there have been many acquisitions by big tech companies within the AI sector. This has raised concerns among regulators due to their access to sensitive data storage platforms such as Google’s purchase of DeepMind and Fitbit. When the Google-DeepMind deal came under scrutiny it was allowed because it was seen as purchasing a competitor.

However, unlike typical Big Tech acquisitions, these partnerships are not about owning technology or data. Both Anthropic, OpenAI, Microsoft, and Amazon are focused on developing human-level AI systems that can be integrated safely with society. But although there is no outright purchase involved here either, the nature of these investments — plus any exclusivity agreement — raises questions about potentially anticompetitive behavior.

Regulators examine Amazon’s AI investment implications

The question that regulators are asking is whether a merger is a disguise for monopolizing the artificial intelligence market now that Amazon has invested heavily in Anthropic.

In the case of Microsoft, the company invested $13 billion at least into OpenAI and previously had a seat on its board of directors. However, Microsoft officially considers OpenAI as its competitor. This shows how complicated these partnerships can be and why they should be reviewed by regulators to ensure fairness in competition.