The cost of doing business inside the GenAI Revolution continues to spike with Amazon’s agreeing to pay $4 billion to red-hot foundation-model vendor Anthropic in exchange for AWS becoming Anthropic’s primary cloud provider for mission-critical workloads.
Of course, the two-stage investment of $4 billion covers even more than that prized designation because the enhanced partnership gives Amazon Web Services a much-needed boost in the cloud-plus-AI wars where it has been losing ground to the other three hyperscalers: Microsoft, Google Cloud, and Oracle.
I use that new term “cloud-plus-AI wars” intentionally because, while the GenAI Revolution is clearly something completely new and unique, it is also 100% dependent on the cloud for its very existence and future development. So for AWS, the mega-deal with Anthropic is essential for a few reasons:
- AWS has fallen far behind the other hyperscalers in growth rate. And while AWS remains a powerhouse in the cloud business and should top $100 billion in revenue this year, it has been losing market to share to not only the much-larger and faster-growing Microsoft Cloud, but also to smaller rivals Google Cloud and Oracle, which have been aggressively outflanking AWS on new cloud services and go-to-market approaches.
- Amazon, for all its success with AWS, is at heart a retail and commerce and logistics company, whereas Microsoft and Google and particularly Oracle have accumulated decades of hard-earned enterprise-software experience and expertise. That presented its own challenges for AWS in the cloud and its recent shift toward software rather than just raw compute and storage power.
- And now along comes the GenAI Revolution, which, while reliant on supercomputer hardware, is at its core a classic enterprise-software undertaking. So by pairing up with Anthropic — which, after Microsoft partner OpenAI, is arguably the hottest AI-model startup in the world —AWS gains enormous capability and credibility for the AI era.
- AWS also gains a very big cloud-infrastructure customer because Anthropic’s hockey-stick growth will ensure that it generates massive AI-training workloads that run on AWS, which is not Anthropic’s exclusive cloud provider but is its “primary” provider. As Amazon wrote in describing the relationship, AWS will become Anthropic’s “primary cloud provider for mission-critical workloads, including safety research and future foundation model development.”
- The extended partnership and investment also puts AWS and Amazon solidly into play for the burgeoning AI Ecosystem encompassing the new wave of AI powerhouses such as Open AI, Anthropic, and Cohere; the Cloud Wars Top 10 companies; ISVs with forward-leaning applications and solutions; global SIs and boutique partners; and of course customers, whose role will expand and intensify over time as their AI capabilities increase. That’s a subject near and dear to us here at Acceleration Economy, and we’re launching an AI Ecosystem Summit later this year to help business leaders capitalize on this massive opportunity.
Is $4 Billion a Bargain for Amazon and AWS?
Against that backdrop, I’m starting to think that Amazon got a pretty sweet bargain in ponying up $4 billion for the Anthropic partnership because AWS simply cannot afford to fall farther behind its rivals in the elegant fusion of cloud services with world-changing AI technologies, services, and capabilities.
That thought came to mind as I was reading the announcement about the extended Anthropic partnership. First of all, the announcement came from parent company Amazon, not from AWS; second, it while it’s not unprecedented for Amazon to take the lead on big news involving AWS, it is surely not the norm; and third, the scope and depth of the partnership as described in the Amazon announcement reflects how vital it is for the parent as well as for AWS.
“Amazon and Anthropic deepen their shared commitment to advancing generative AI,” says the headline. That’s a big and bold and ambitious statement — it’s not about AWS getting first shot at some new models, or about a minimum volume of workloads that Anthropic guarantees to run on AWS. No, it’s much grander in scope than that: one of the world’s best-known companies is investing $4 billion with a startup that until about a year ago was one of the world’s least-known tech brands — but my oh my how things have changed in those 12 months!
I’ll let Amazon tell the story in its own words — here are the first several sentences from the announcement:
“The work Amazon and Anthropic are doing together to bring the most advanced generative artificial intelligence (generative AI) technologies to customers worldwide is only beginning. As part of a strategic collaborative agreement, we and Anthropic announced that Anthropic is using Amazon Web Services (AWS) as its primary cloud provider for mission critical workloads, including safety research and future foundation model development. Anthropic will use AWS Trainium and Inferentia chips to build, train, and deploy its future models and has made a long-term commitment to provide AWS customers around the world with access to future generations of its foundation models on Amazon Bedrock, AWS’s fully managed service….”
A bit later on in the announcement, AWS vice-president of data and AI Swami Sivasubramanian offered this perspective: “Generative AI is poised to be the most transformational technology of our time, and we believe our strategic collaboration with Anthropic will further improve our customers’ experiences, and look forward to what’s next.”
Amazon also described how the partnership with Anthropic also includes the tie-in with Accenture to help customers develop industry-specific AI capabilities and achieve the type of breakthrough business outcomes that strategically deployed AI is expected to generate.
“To further help speed the adoption of advanced generative AI technologies, AWS, Anthropic, and Accenture recently announced that they are coming together to help organizations — especially those in highly-regulated industries including healthcare, public sector, banking, and insurance —responsibly adopt and scale generative AI solutions. Through this collaboration, organizations will gain access to best-in-class models from Anthropic, a broad set of capabilities only available on Amazon Bedrock, and industry expertise from Accenture, Anthropic, and AWS to help them build and scale generative AI applications that are customized for their specific use cases.”
Final Thought
If Amazon and AWS can leverage the Anthropic partnership to achieve even some or perhaps most of those objectives, then I think Amazon CEO Andy Jassy will regard the $4 billion investment in Anthropic as an absolute bargain. Perhaps even, to quote the Who, “I’d call that a bargain — the best I ever had.”
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