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The AI Deals Enriching Silicon Valley’s Tech Giants

Amazon, Google and Microsoft have spent the past year investing billions of dollars in artificial-intelligence startups—while also charging those fledgling companies a similar amount to use their cloud platforms.

The deals are making the big tech firms both the largest backers and most direct beneficiaries of these startups, reflecting how some of the AI boom’s biggest rewards keep going to the most powerful players. The value of the tech giants’ stakes could shoot up if the startups take off. And if not, they still will have turned chunks of cash into revenue.

For the startups, the deals give them the cash they need to train advanced AI models as well as access to the scarce computing power essential for developing and deploying products such as ChatGPT.

The symbiosis between AI startups and the tech giants is sidelining the venture capitalists that typically back young companies. Those investors rarely spend in the billions and have been more wary of paying the high valuations that come alongside the large deals.

In September, Amazon announced a deal to invest up to $4 billion into Anthropic, a rival to ChatGPT creator OpenAI. Not part of the announcement was another deal the Seattle giant struck: Anthropic committed to spend $4 billion on Amazon’s cloud platform, Amazon Web Services, over the next five years, according to people familiar with the matter.

Google, which had invested in Anthropic early this year, recently agreed to pour up to $2 billion more into the startup, The Wall Street Journal reported last week. That new commitment came months after the startup agreed to spend more than $3 billion on Google Cloud.

The AI Deals Enriching Silicon Valley’s Tech Giants (msn.com)

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