Tech giants like Google, Amazon, and Microsoft have invested several billion dollars in AI startups. They have also charged a similar amount to fledgling companies for using their cloud platforms. The big tech companies are the largest backers of AI startups, a move that sidelines venture capitalists.
AI startups receive funds to train advanced AI models
The value of the stake in these tech giants could go up if these AI startups flourish. Even otherwise, the tech companies will generate revenues by turning chunks of cash. In the latest world news, the cash flow from tech giants helps AI startups train their advanced artificial intelligence models. It also gives them access to the scarce computing power needed to develop and implement products like ChatGPT.
Amazon announces an investment of $4 billion to develop a rival to Chat GPT
The e-commerce giant announced an investment of up to $4 billion in Anthropic in September 2023. In another deal, Anthropic agreed to spend $4 billion on Amazon Web Services, the cloud platform of Amazon, in the next 5 years.
Google, which already pumped significant funds into Anthropic, decided to commit an additional $2 billion to this startup, according to the latest USA news. The latest development is that after several months, Anthropic agreed to commit over $3 billion to the cloud platform of Google.
Microsoft committed $13 billion to OpenAI
Microsoft was the first to invest $13 billion in the AI startup OpenAI. On the other hand, OpenAI has invested several billions of dollars in the cloud at Microsoft. So far, such deals by the tech giants are the biggest backers of AI startups. The total investment of Amazon, Google, and Microsoft is around $20 billion in OpenAI and Anthropic. The startups spend the majority of the amount on cloud computing. The tech giants would recover their revenues from the cloud.
A former employee of OpenAI and the founder of Kindo, the AI startup, Margaret Jennings, said it is a masterstroke for cloud providers. The tech giants will receive their investments back once the startups flourish. They also have direct access to the product and research teams of these startups and know how their strategy will help steer and influence them.
The necessity of supercomputers fitted with high-end chips
After the success of ChatGPT a year ago, several AI startups are in a race to achieve the next breakthrough in generative artificial intelligence, which is enabling software to behave like humans. AI startups need supercomputers developed using high-end chips to develop such a technology. They also need several billions of dollars to work on and deliver the models. Only tech giants could afford to invest such large amounts in AI startups.
Microsoft invested $1 billion in OpenAI, a generative AI startup, four years ago. As per the terms of the deal, OpenAI will train the software on the Azure servers. It also agreed to release its products through this platform. Microsoft ramped up its plans to invest $10 billion in January. The tech giant started reaping the benefits when customers started signing up to use the services of ChatGPT and its build tools. The revenues of Azure increased by a whopping 29% in the recent quarter compared to the same period a year earlier.