The U.K.’s Competition and Markets Authority (CMA) has initiated an early-stage probe into Google's investments in Anthropic, a U.S. AI company. This follows Alphabet's significant investments in Anthropic, totaling around $2.3 billion. The CMA is inviting stakeholders to comment on whether this partnership constitutes a "relevant merger situation" and if it could lead to a "substantial lessening of competition" in the U.K.

Background on Anthropic

Founded in San Francisco in 2021, Anthropic focuses on developing AI systems with an emphasis on safety, transparency, and risk mitigation. It operates as a public benefit corporation (PBC) and has developed large language models (LLMs) and a chatbot named Claude, comparable to OpenAI’s ChatGPT and Google’s Bard. Anthropic has raised nearly $10 billion, with significant investments from Google and Amazon.

Regulatory Concerns

Regulators are concerned that big tech companies are using strategic investments to gain control over innovative startups without triggering regulatory scrutiny that a full acquisition would. This "quasi-merger" approach includes hiring startup founders and technical talent or making strategic investments.

The CMA has been investigating similar deals, including Microsoft’s investment in French startup Mistral AI and Amazon’s ties with Anthropic. Additionally, the CMA is expected to launch a full-scale probe into Microsoft’s partnership with OpenAI and has already started a regulatory probe into Microsoft’s hiring of the core team behind Inflection AI.

Next Steps

Interested parties have until August 13, 2024, to provide comments to the CMA. There is no guarantee that the probe will advance to a formal "phase 1" investigation.