The UK Competition and Markets Authority launched an investigation In a partnership between Google’s parent company Alphabet and artificial intelligence firm Anthropic.
Google agreed Invest up to $2 billion Last year also in Anthropic acquired 10% stake In return for an injection of $300 million from the end of 2022. The AI security and research startup, co-founded by former OpenAI executives Dario and Daniela Amodei, also hosts its own cloud models Google Cloud Vertex AI,
Anthropic responds to Google investigation
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CMA first expressed its interest in the partnership in July, when it Those with information invited to comment on whether it represents a “relevant merger situation” that would result in “a substantial lessening of competition in any market or markets for goods or services in the United Kingdom.”
This week, the CMA said it had collected enough information to warrant a Stage 1 investigation, a preliminary review of whether a merger is likely to reduce competition. In doing so, it will be able to decide whether a more intensive Phase 2 investigation is necessary, and the results will be given before December 19.
An Anthropic spokesperson told TechRepublic in an email: “We continue to cooperate with the CMA and provide them with the full picture regarding Google’s investment and our commercial collaboration.
“We are an independent company and none of our strategic partnerships or investor relationships impair our independence of corporate governance or our freedom to partner with others. Freedom is a core feature of Anthropic – integral to our public benefit mission and to serving our customers wherever and however they choose to access the cloud.
A Google spokesperson told TechRepublic in an email: “Google is committed to building the most open and innovative AI ecosystem in the world. “Anthropic is and is free to use multiple cloud providers, and we do not seek exclusive technical rights.”
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CMA’s Unique Approach to the Alphabet-Anthropic and Amazon-Anthropic Partnerships
In September, the CMA approved the partnership between Amazon and Anthropic amid competition concerns as Anthropic’s turnover was below the threshold for relevant merger status. The two companies together do not control 25% or more of any market in the country, and therefore do not pose any significant threat to competition.
While Amazon and Alphabet have similar market capitalization, the latter is larger. approximately $40 billionUntil this month, that could tip the scales. CMA’s investigation into the Alphabet-Anthropic partnership points to significant differences from Amazon’s investment and suggests a unique impact competition has.
Microsoft’s appointment of senior staff from Anthropic Competitive Inflexion was deemed a relevant merger by the CMA in September, but did not pose a significant threat to competition. Inflexion’s proprietary chatbot, Pie, was not a major player in the market, and the company was not innovative enough.
However, the CMA may view Anthropic’s deal differently. Microsoft paid inflation $650 million As part of their partnership, Anthropic accepted about a third of what it did from Alphabet.
The CMA is still looking into whether the relationship between Microsoft and OpenAI opens up the possibility of a merger, which could affect competition.
Why is the CMA investigating Big Tech firms?
Big tech companies are increasingly investing in young AI startups to gain early control and take advantage of the AI boom. In particular, this can be seen through partnerships such as Microsoft and OpenAI, Nvidia and Inflection AIand of course, Google and Anthropic,
However, such collaboration could lead to market dominance, making it more difficult for other independent companies to obtain funding, attract talent, or compete with the advanced technology and access of larger players.
Completed mergers and acquisitions often trigger extensive regulatory scrutiny and potential antitrust actions for this reason, which can delay or block proceedings. To avoid this situation, big tech players make strategic investments in the most promising startups and hire their top talent, allowing them to gain influence and access to untested innovative technologies.
In fact, According to CMAThe AI industry currently consists of “an interconnected web of over 90 partnerships and strategic investments involving similar companies”.
In an April report How CMA is looking at AI fundamental models“Without fair, open and effective competition and strong consumer protections based on these principles, we see a real risk that the full potential of organizations or individuals to use AI for innovation and disruption will not be realised,” the authority said. Nor were its benefits shared widely throughout society.
“That is why we have set out underlying principles that we believe are important to protect those situations. It is essential for competition agencies to work with market participants and other interested stakeholders to shape these positive outcomes.
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The CMA is seeking to identify relevant merger situations that allow big tech companies to “protect themselves from competition” in the UK. It states that “a range of different types of transactions and arrangements” may represent a relevant merger with provisions in place. Enterprise Act 2002,
The Digital Markets, Competition and Consumer Bill passed in May also “anticipates new powers for the CMA.” According to the April report, the CMA can “enforce consumer protection laws against offending companies” and impose non-compliance fines of up to 10% of a company’s worldwide turnover.
“We stand ready to use these new powers to raise standards in the market and, if necessary, deal with companies that do not follow the rules through enforcement action,” it added.
Additionally, in July, the CMA issued a joint statement with the European Commission, the US Department of Justice, and the US Federal Trade Commission, where they committed to studying whether the AI industry allows adequate competition.
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