Director of Europe & transatlantic partnerships Max von Thun talks about the progression of a deal between leading AI startup Anthropic and Amazon.

In late September, Amazon announced a sweeping new “strategic collaboration” with leading AI startup Anthropic worth several billion dollars. The deal involves an unusual degree of coordination between the two companies, with Anthropic committing to using Amazon’s cloud infrastructure and proprietary chips to build, train, and deploy its foundation models, while giving Amazon’s engineers and platforms privileged access to those models. In return, Amazon will invest up to $4 billion in Anthropic and acquire a minority stake in the company. 

While the deal may not look problematic at first glance, it is just the latest example of Big Tech’s efforts to corner the nascent generative AI market through strategic investments and partnerships. In exchanging model access for use of the highly concentrated computing resources they own and control, the tech giants are effectively buying themselves an insurance policy, ensuring that even if their own in-house AI efforts flop, their digital dominance will be maintained. 

Microsoft’s $10 billion partnership with OpenAI, which similarly gives Microsoft privileged access to OpenAI’s technology while locking its dependence on Microsoft’s cloud computing infrastructure, is another clear illustration of this strategy. Other leading startups that have inked major deals with Big Tech firms include Hugging Face (Amazon), Cohere (Google, Nvidia), Stability AI (Amazon) and Inflection AI (Microsoft, Nvidia). These partnerships appear to be serving the same purpose as “killer acquisitions” in the past – think of Facebook’s acquisition ofWhatsApp or Google’s purchase of YouTube – raising serious concerns about fair competition in the fledgling AI market. 

Even without the effect of mergers and partnerships between Big Tech firms and leading AI startups, there are good reasons to believe that – left to itself – the market for foundation models trends towards consolidation. Vanishingly few companies have access to the cloud infrastructure, advanced chips, data and expertise needed to train and deploy cutting-edge AI models. The pool is likely to shrink further as network effects, economies of scale, and user lock-in take increasing effect. 

Should we be worried about a handful of incumbents controlling AI? There is plenty of evidence to show that market concentration undermines innovation, reduces investment, and harms consumers and workers. This is especially true in digital markets – from search engines and app stores to e-commerce and digital advertising – where a few corporations have gained so much power that they are able to extract value from and impose terms on everyone in their orbit, while having a disproportionate say over the information we consume and the ways in which we communicate. 

That includes the exploitative tolls Amazon, Apple and Google are able to impose on the traders and developers dependent on their online superstores, the role of a few huge social media platforms in disseminating disinformation and fueling polarization, and the hollowing out of the media industry as a result of the tech giants’ digital advertising monopoly. These monopolistic abuses are not only bad in economic terms, but also bear significant responsibility for the perilous state our democracies find themselves in today. 

Sadly, it isn’t difficult to envision a similar future for AI, where a few dominant firms monopolize critical upstream inputs (cloud infrastructure, foundation models) and use their position to dictate terms to everyone else. Unlike the previous wave of technological disruption, in which plucky upstarts rose from obscurity to create and dominate entirely new markets, when it comes to generative AI, the incumbents have a head start. This isn’t just because of their aforementioned advantages when it comes to computing power, data and talent. They also control ubiquitous platforms that they deploy to nudge or lock existing users into using their favoured AI services – from Microsoft rolling out OpenAI’s technology across its suite of office applications, to Google building generative AI into its search engine. 

Through their control of AI, Big Tech firms are likely to steer the technology in a direction that serves their narrow economic interests rather than the public interest, despite the grave societal harms this approach has inflicted over the past two decades. Free from the restraints of competition and regulation, they can be expected to deploy AI to maximize screen time, turbocharge invasive data collection, amplify manipulative targeted advertising, all while doing their utmost to keep users confined in their walled gardens.   

Read full article here.