The UK Competition and Markets Authority has launched an investigation in the partnership between Google’s parent company, Alphabet, and artificial intelligence firm Anthropic.

Google agreed invest up to $2 billion in Antropic last year and also received a 10% package. in exchange for a $300 million injection from late 2022. The AI ​​research and safety startup, co-founded by former OpenAI executives Dario and Daniela Amodei, also hosts Claude models on Google Cloud Vertex AI.

Anthropic, Google reacts to the investigation

CMA first made its interest in the partnership known in July when it invited those with information to comment if it is a “relevant merger situation” which “will result in a substantial lessening of competition in any market or markets in the United Kingdom for goods or services”.

This week, the CMA said it had gathered enough information to warrant a Phase 1 investigation, an initial assessment to establish whether there is a realistic prospect that the merger would substantially reduce competition. In doing so, it will be able to decide whether a more in-depth phase 2 investigation is required, and an outcome will be given before December 19.

An anthropy spokesperson told TechRepublic in an email: “We continue to cooperate with the CMA and provide them with a full picture of Google’s investment and our commercial collaboration.

“We are an independent company and none of our strategic partnerships or investor relations diminish the independence of our corporate governance or our freedom to collaborate with others. Anthropic’s independence is a core attribute – integral to both our public benefit mission and serving our customers wherever and whenever they prefer to access Claude.”

A Google spokesperson told TechRepublic in an email: “Google is committed to building the world’s most open and innovative AI ecosystem. Anthropic is and is free to use multiple cloud providers, and we do not ask for exclusive technology rights.”

SEE: Google is abusing its dominant position in the ad tech sector, the UK government says

CMA’s distinctive approach to the Alphabet-Antropice and Amazon-Antropice partnerships

In September, CMA cleared Amazon and Anthropic’s partnership of competition concerns in part because Anthropic’s turnover was below the threshold for a relevant merger situation. Also, the two companies together do not control 25% or more of any market in the country and therefore do not pose a significant competitive threat.

While Amazon and Alphabet have a similar market cap, the latter is larger with approximately 40 billion dollarsfrom this month, which could tip the scales. The CMA’s investigation into the Alphabet-Anthropic partnership points to key differences from Amazon’s investments and suggests a uniquely impactful competition.

Microsoft’s hiring of senior employees from competitor Anthropic Inflection was considered a relevant merger by the CMA in September but did not pose a significant threat to competition. Inflection’s proprietary chatbot, Pi, wasn’t a dominant player in the market, and the company wasn’t innovative enough.

However, the CMA may see Anthropic’s business differently. Microsoft paid Inflexion 650 million dollars as part of their partnership, about a third of what Anthropic accepted from Alphabet.

The CMA is also still considering whether connections between Microsoft and OpenAI opens the possibility of a merger, which could affect competition.

Why is the CMA investigating Big Tech firms?

Big Tech firms are quickly investing in young AI startups to gain early control and capitalize on 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 collaborations can lead to market dominance, making it more difficult for other independent companies to obtain funding, attract talent, or compete with the advanced technology and reach of the big players.

Complete mergers and acquisitions often trigger extensive regulatory scrutiny and potential antitrust actions as a result, which can delay or block proceedings. To avoid this situation, the big tech players instead make strategic investments in the most promising startups and hire their top talent, allowing them to gain influence and access to uncontrolled innovative technologies.

indeed according to CMAthe AI ​​industry currently contains “an interconnected network of more than 90 strategic partnerships and investments involving the same firms.”

In an April report on how CMA analyzes the underlying models of AIsaid the authority, “Without fair, open and effective competition and strong consumer protection underpinned by these principles, we see a real risk that the full potential of organizations or individuals to use AI to innovate and disrupt will not be realized , nor its benefits widely shared throughout society.

“That is why we have set out the underlying principles that we believe are essential to protect these conditions. It is essential that competition agencies work with market participants and other stakeholders to shape these positive outcomes.”

SEE: Delaying UK AI rollout by five years could cost economy more than £150bn, Microsoft report says

The CMA seeks to identify relevant merger situations that would allow large technology companies to “protect themselves from competition” in the UK. Enterprises Act 2002.

The Digital Markets, Competition and Consumer Act which was passed in May “also provides for new powers for the CMA”. According to the April report, the CMA can “enforce consumer protection law against infringing firms” and impose non-compliance penalties of up to 10% of a firm’s worldwide turnover.

“We stand ready to use these new powers to raise standards in the market and, if necessary, tackle non-compliant firms through enforcement action,” it said.

Moreover, 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 have committed to studying whether the AI ​​industry allows for sufficient competition.