The AI Love Triangle: Google, Amazon and Anthropic's Fateful Deal

The Gist

Crisis averted. Google Cloud initiates weeklong sprints to fix performance issues affecting key client, Anthropic.
Strategic shift. Anthropic secures $4 billion from Amazon, pivoting away from Google despite Google's previous $300 million investment.
Tough questions. Google faces challenges in AI strategy and cloud services, particularly as competition gains ground.

On a Saturday night in mid-September, a senior Google engineer shared some rough news with more than 50 colleagues. Part of the company’s cloud services offering was failing Anthropic, a darling AI startup and key strategic customer, and they’d have to work overtime to fix it.

Google Cloud Scrambles to Fix Unstable NVIDIA Cluster

To repair the faulty part of its service — an underperforming and unstable NVIDIA H100 cluster — Google Cloud leadership initiated a seven-day-per-week sprint for the next month. The downside of not making it work, the senior engineer said, was “too large, for Anthropic (most importantly), for Google Cloud, and for Google,” according to documents reviewed by Big Technology.

Anthropic Ditches Google for Amazon's Billions

One week after Google initiated the sprint, Anthropic announced it landed a new investment of up to $4 billion from Amazon that would make Amazon Web Services its “primary cloud provider for mission-critical workloads.” The Amazon deal was in the works long before Google Cloud’s performance issues, and unrelated according to a source familiar with the matter, but Google’s sprinting engineers couldn’t have felt good seeing Anthropic ink a major deal with the competition. Especially after Google put about $300 million of funding into Anthropic late last year for 10% of the company.

Anthropic Stands Tall Among AI Giants

Anthropic is one of the few independent AI research firms that can credibly stand beside OpenAI and the tech giants. A handful of OpenAI expatriates founded the company out of concern their ex-employer wasn’t as open and safe as it claimed. Earlier this year, Anthropic released Claude, its answer to ChatGPT.

Anthropic, an American artificial intelligence startup and public-benefit corporation, has made a new deal with Amazon. Timon on Adobe Stock Photos

In addition to Claude the bot, Anthropic allows developers to build on top of its AI models, and the training and execution require significant capital and compute. To that end, Anthropic’s relied on the tech giants to support it, similar to how OpenAI’s relied on Microsoft. But the agreements are not quite parallel. Even after its Amazon deal, Anthropic will continue to partner with Google, making itself more of a neutral player among AI research houses.

Amazon Gains, Google Puzzled by Anthropic Deal

Still, Anthropic’s new funding deal should be a boon to Amazon and leave Google a bit puzzled. For Amazon, it means landing a new strategic partner that can help it advance the research status quo — something it’s been missing despite an eagerness to facilitate building on all models. For Google, the deal leads to a number of questions, especially regarding where it wants to play in AI. As it builds its own AI models with Google DeepMind, will it risk losing AI customers in cloud? Does it want to prioritize reinventing search with AI, or helping businesses reinvent themselves with it? Can its lower margin divisions like Google Cloud Platform operate with the same urgency as its higher margin search businesses?

Google Cloud Recovers, Risks Remain

Google may successfully be able to do it all at once, but as it looks ahead, it will risk being outflanked by competition with less fraught tradeoffs. Google Cloud’s performance issues with Anthropic, meanwhile, seem to be settling down. But not without forcing engineers into something not often associated with life at Google — weekend work.