UK Competition Watchdog Clears Amazon-Anthropic Partnership

UK Competition Authority Approves Amazon-Anthropic Merger

The UK's Competition and Markets Authority (CMA) will not investigate the partnership between Amazon and Anthropic under the UK's merger laws, it announced on September 27. This is because Anthropic's turnover falls below the threshold prescribed under the Enterprise Act 2002, which mandates that an investigation by the CMA is warranted only when the acquired company has a turnover of more than 70 million pounds in the UK. Amazon announced in March 2024 that it invested $2.75 billion into AI startup Anthropic. The agreement allowed the e-commerce company to use Anthropic's AI models and provide Anthropic with Amazon Web Services (AWS) Trainium and Inferentia chips to build, train, and deploy its future AI models. Amazon also secured consultation rights on significant Anthropic business issues. Additionally, Amazon obtained a right of first notification regarding any potential change of control over Anthropic, enabling Amazon to submit a counteroffer within a specified time period. In April, the CMA invited comments from third parties to asses this deal, along with partnerships between Microsoft and Mistral AI and Microsoft and Inflection AI, and its impact on competition in the UK. The regulator identified three interlinked risks to open and fair competition in the markets for AI Foundation Models (FM): Why did the CMA drop the investigation? According to the Enterprise Act 2002, a relevant merger situation arises when two or more enterprises cease to be distinct. Additionally, the business being taken over must have a UK annual turnover of at least 70 million pounds, and the combined businesses must have at least a 25% share of any reasonable market. With regards to the first criterion, the UK considers two or more enterprises lacking distinction if they are brought under common ownership and control. The CMA said, "Control is not limited to acquisitions of outright voting control but may include situations falling short of voting control, including through the exercise of material influence." So, the CMA also considers the acquirer's ability to influence the management, the strategic direction, and the commercial objectives of the acquired business. In the case of the partnership between Amazon and Anthropic, the CMA did consider whether certain elements of the partnership resulted in Amazon having material influence over Anthropic. However, Anthropic's UK turnover does not exceed 70 million pounds in the UK, nor does the partnership (based on the available evidence) account for a 25% or more share of the supply of any description of goods or services in the UK. Thus, the CMA could not reach a conclusion. The US Federal Trade Commission (FTC) also launched an investigation into Amazon and Anthropic on January 25. This was part of a larger investigation into investments and partnerships involving generative AI companies and major cloud service providers. The regulator is specifically looking into the partnerships between Microsoft and OpenAI, Google and Anthropic. All these five companies have been asked to provide more information on these partnerships.

UK competition watchdog clears $4B Amazon Anthropic union

Tie-up between AI toolmaker and Bezos biz doesn't qualify for merger partnership probe The UK's Competition and Markets Authority (CMA) has decided to drop its investigation into Amazon's alliance with Anthropic, saying a significant deciding factor was a lack of local turnover for the AI toolmaker. The regulator issued a call for views on the matter in April amid concerns that Amazon's $4 billion total investment in Anthropic could be regarded as more of a merger than a sprinkling of cash. At the time, Amazon insisted it was merely investing, Anthropic could run its models on anyone's cloud, and the megacorp wouldn't have a director seat on Anthropic's board. In August, the CMA took a closer look at the agreement to determine if a deeper inspection was required. The good news for Amazon and Anthropic is that the authorities don't regard it as a merger situation. In its decision, the CMA didn't reach a conclusion on whether the partnership might result in Amazon having a material influence over Anthropic. There was no need for it to do so. Anthropic's UK turnover didn't exceed £70 million ($93 million) in the UK and Amazon and Anthropic didn't account for more than 25 percent of the UK market share. The watchdog said: "The CMA does not therefore believe that it is or may be the case that a relevant merger situation has been created." A spokesperson at Amazon told The Register: "We welcome the UK's Competition and Markets Authority (CMA) decision acknowledging its lack of jurisdiction regarding this collaboration. By investing in Anthropic, we're helping to spur entry and competition in generative AI." Earlier this month, the CMA cleared Microsoft's acquihire of Inflection AI on similar grounds - the startup was not big enough to matter. The EU followed suit, although the Netherlands Authority for Consumers and Markets (ACM) argued it needed extra powers in the light of referrals being dropped due to Inflection's relatively low turnover. While the CMA has decided that a deeper dive into Amazon's deal with Anthropic is outside of its jurisdiction, it is still looking at Alphabet's partnership with Anthropic. Google recently invested another $2 billion in thr AI biz on top of the half billion it had spent earlier in the year. The CMA did not comment when asked if the Alphabet investigation might also be dropped under similar grounds to Amazon's. The investigation is, after all, still ongoing. ®

UK competition watchdog closes Amazon-Anthropic probe

The Competition and Markets Authority launched a preliminary merger investigation last month. The UK competition watchdog has closed its investigation of Amazon's $4bn partnership with AI start-up Anthropic. In early August, the Competition and Markets Authority (CMA) launched an inquiry into the deal due to concerns that it may have resulted in a "relevant merger situation" which could impact competition in UK markets. In a statement released last Friday (27 September), the CMA said that the partnership does not meet its criteria for a merger concern and has closed its investigation. "The CMA considered whether certain elements of the partnership, taken together, may result in Amazon having material influence over Anthropic," the statement reads. The CMA found that they did not need to probe further because the partnership did not meet the criteria for material considerations. Among the material considerations is the fact that Anthropic's UK turnover does not exceed £70m and "on the basis of available evidence" the partnership does not account for a 25pc or more share of supply of any description of goods or services in the UK. "We welcome the UK's Competition and Markets Authority decision acknowledging its lack of jurisdiction regarding this collaboration," an Amazon spokesperson told The Register. "By investing in Anthropic, we're helping to spur entry and competition in generative AI." While Anthropic clarified that any strategic partnerships or investor relationships do not diminish its "corporate governance independence or freedom to partner with others", a spokesperson for the company told Reuters. Last year, Amazon shared plans to invest $4bn into the start-up, which is the creator of ChatGPT competitor Claude. This began with an initial investment of $1.25bn that gave the e-commerce giant a minority stake in the business. Amazon followed this up in February with a $2.75bn investment, further boosting its minority ownership position. Other tech giants have gained a foothold into Anthropic, such as Google and Salesforce. As part of the partnership between the two companies, Amazon Web Services (AWS) is Anthropic's primary cloud provider for certain workloads. Anthropic will use AWS Trainium and Inferentia chips to build, train and deploy its future foundation models. Moreover, the two will work together on improving the chips in the future. Amazon developers and engineers will also be able to build with Anthropic models via Amazon Bedrock so they can "incorporate generative AI capabilities into their work" as well as enhance existing applications and create new customer experiences across Amazon's businesses. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.