Why Billion-dollar IT Companies Are Funding AI Startups

Why Billion-dollar IT Companies Are Funding AI Startups

This week, Amazon revealed a $2.75 billion investment in artificial intelligence (AI) firm Anthropic, joining the ranks of other digital behemoths that have snapped up promising startups. Amazon has made similar investments in the past and is currently developing its own AI strategy. Microsoft, Facebook’s parent company Meta, Google, and Facebook have all made similar investments. This is strategic, according to a report, because enterprises, not venture investors, are making the direct investments.

According to CNBC, the tech giants’ decisions are influenced by their desire to join the AI ecosystem, as stated by Fred Havemeyer, head of US AI and software research at Macquarie.

“They definitely don’t want to miss out on being part of the AI ecosystem. I definitely think that there’s FOMO in this marketplace,” Havemeyer was quoted as saying. The research added that the high costs are necessary since AI models require thousands of specialized chips to develop and train.

Investments from Google and Microsoft

Probably one of the most well-known investments in the AI area is OpenAI, a division of Microsoft that created ChatGPT. It invested $1 billion in OpenAI in 2019 and has reportedly increased that amount to $13 billion over time. Microsoft offers part of its Azure cloud services using OpenAI’s methodology.

Alphabet, the parent firm of Google, is another tech giant that makes investments and develops models. In addition to concentrating on creating Gemini, its own AI model, Google promised to invest $2 billion in Anthropic. 10% of the startup was acquired, and the businesses had a sizable cloud contract.