From the New York Times, March 11:
The internet giant owns 14% of the high-profile artificial intelligence company, according to legal filings obtained by The New York Times.
To win the artificial intelligence race, Google not only has developed its own technologies, but has also pumped money into prominent A.I. start-ups. And to preserve its competitive edge, Google has kept its ownership stakes in those start-ups a secret.
Court documents recently obtained by The New York Times reveal Google’s stake in one of those start-ups, Anthropic, as well as how its investment in the young company is set to change.
Google owns 14 percent of Anthropic, according to legal filings that the A.I. start-up submitted as part of a Google antitrust case. But that investment gives Google little control over the company. The internet giant can own only up to 15 percent of Anthropic, according to the filings, and Google holds no voting rights, no board seats and no board observer rights at the start-up.
Still, Google is set to invest an additional $750 million in Anthropic in September through a type of loan known as convertible debt, according to the filings. The companies agreed to the convertible note in 2023. In total, Google has invested more than $3 billion in the A.I. company.
The filings offer a rare glimpse into a big tech company’s investment in an A.I. start-up. Such investments have been under scrutiny by regulators, who questioned whether the deals gave incumbents an unfair advantage in the rapidly evolving and powerful technology. Apart from Google, Amazon and Microsoft have also invested in high-profile A.I. start-ups such as Anthropic and OpenAI, the maker of the ChatGPT chatbot.
“A big company like Google knows that there is a race to A.I., and it has a big enough cash pile that it can bet on multiple horses,” said Chris V. Nicholson, an investor with the venture capital firm Page One Ventures who focuses on A.I. technologies.
Anthropic’s filings emerged in a landmark Google antitrust case over online search. In August, a federal court found that Google had acted as a monopolist in internet search, violating the law.
To remedy the situation, the Justice Department, which brought the case against Google, had proposed that the court force the Silicon Valley company to sell any A.I. products that could compete with search. That could have included Google’s stake in Anthropic, which makes a chatbot called Claude that people could turn to for search queries.
On Friday, the Justice Department pulled back on that proposal, arguing that Google should be required to notify government officials only before it makes investments in A.I....
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Some of the reasons the antitrust peeps are looking at investments and outright purchases at 2018's "Have A Start-Up? DON'T Step Into Google and Facebook’s “Kill Zone”: (FB; GOOG)" and 2019's "Antitrust: "FTC Considering Steps to Block Facebook from Merging With Instagram and Whatsapp: Report" (FB; GOOG)" and "Facebook Antitrust: Restraint of Trade (FB)" which referenced. a drum yours truly has been beating for a couple years
We've mentioned a few times that Google and in particular Facebook are susceptible to old-school antitrust analysis because of their use of the John D. Rockefeller "Buy 'em, Copy 'em, or Crush 'em" approach to competition....
Related, September 2024's "Nvidia And Antitrust (NVDA; DoJ)":
Yesterday, ahead of Bloomberg's scoop on the U.S. Department of Justice issuing subpoenas to Nvidia and others as they investigate possible antitrust violations, we had a post on the coming shift in the use of AI chips from training Large Language Models to inference, actually getting something useful out of the LLMs, "Chips: The Pivot From Training To Inference (where Nvidia's dominance isn't as strong)."
The primary link in that post was to an IEEE Spectrum article on recent performance tests of various chips in inference mode. Our post then veered off to look at Cerebras Systems' very competitive offering for inference chores.
Which ended up with a cryptic/borderline coy (only borderline, I've never been accused of being coy) outro:
...Nvidia is well aware of Cerebras and has been quietly working their inference speeds but should all else fail, NVDA has $34.8 billion in cash and equivalents, friendly bankers and stock that seems pretty darn fungible with U.S. dollars.
If you catch my drift.
That
obscurity was deliberate. Even without knowledge of the subpoenas, it
is widely known that one of the subjects of the antitrust probe is
Nvidia's $700 million purchase of Run:ai in April.
(the other area of interest is whether Nvidia was illegally bundling
various products and/or giving disparate treatment to customers who
would or wouldn't buy the packages, including longer wait-times for
chips etc., or differential pricing for customers who bought exclusively
from Nvidia)
There are many ways that the acquisition of a non-competitor can be restraint-of-trade in violation of the antitrust rules and regs. The most egregious examples were committed by Facebook.*
Fortunately for those of us looking at these issues from the outside, the antitrust/competition mavens at the University of Chicago's Stigler Center just had a symposium on this very topic and put together a few articles for their in-house publication, ProMarket....
August 30
The Case for Vigilance in AI Markets
Stacey Dogan writes that antitrust regulators in the United States and Europe are right to investigate Big Tech-AI partnerships. Even if AI markets remain competitive today, history and economics show that the Big Tech companies will push to monopolize segments of the AI market if given the opportunity. The investigations serve as a deterrent against anticompetitive behavior and give the regulators access to the knowledge and information that will be necessary to detect anticompetitive patterns as the AI market matures.Editor’s Note: This article is part of a symposium which asks experts to evaluate the anticompetitive harms of Big Tech investments in AI startups in light of recent investigations from antitrust agencies on both sides of the Atlantic. See here to read the other contributions from Matt Perault, Vivek Ghosal, and John Kirkwood.
Antitrust authorities in the United States and around the world have expressed keen interest in the growing web of relationships between dominant tech firms and artificial intelligence (AI) developers. The relationships have come fast and furiously, accompanied by hefty price tags and dressed up in a variety of transactional forms. The firms present the deals as innovation and efficiency-enhancing and characterize the AI marketplace as highly competitive....
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August 29
How Big Tech’s AI Startup Alliances Could Harm Competition
John B. Kirkwood explains six ways in which Big Tech’s alliances with AI startups could harm competition, making clear that the antitrust agencies have good reason to monitor and investigate them....
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August 27
Big Tech Investments in AI Startups Do Not Raise Competitive Red Flags
Vivek Ghosal reviews the data, economics, and market conditions of the growing artificial intelligence market and finds that it is quite dynamic in terms of evolving partnerships and firms, and is relatively competitive. Thus, Big Tech investments into AI startups do not warrant investigation by the government at this time....
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