CMA probe of Google, Anthropic ‘a precautionary’ move: Analyst

A move by the UK’s Competition and Markets Authority (CMA) to formally launch a probe into Google’s purchase of a $2 billion stake in Anthropic, “sounds like a precautionary investigation across the board to me, primarily due to the fact that the CMA just recently approved Amazon’s Anthropic investment and partnership,” an industry analyst said Thursday.

Scott Bickley, advisory fellow at Info-Tech Research Group, said, “on the surface, the deal with Google seems materially similar in nature. Both Microsoft and Alphabet/Google are now being scrutinized for their respective partnerships with OpenAI and Anthropic by the CMA. The inquiry into Google may merit a closer look, however, in light of the DOJ’s recent finding against the company’s anti-competitive practices in the areas of search and advertising.”

The CMA, in a statement released Thursday, indicated that it had obtained “sufficient information” to launch a preliminary investigation into the investment by Google, which was first announced last year and involved an initial investment of $500 million, with the remainder to be invested at a later date.

Once the preliminary investigation is completed, on Dec. 19 the regulator will announce whether or not a more detailed phase 2 probe will take place.

Bickley said he suspects “the CMA would be looking for unfair advantages via the coupling of AI-powered capabilities layered over their existing search capabilities and advertising services, which would further enhance their market dominance. Any finding at this point would be premature, as Alphabet has not implemented services in this manner.”

Last March, Amazon announced it was investing $2.75 billion in Anthropic, bringing its total investment in the AI startup to $4 billion.

As part of this partnership, Anthropic said it would use Amazon Web Services (AWS) as its main cloud provider for key operations, including safety research and the development of foundational models. It will also use AWS Trainium and Inferentia chips for building, training, and deploying future models.

The CMA ruling on that investment was released on Sept. 27 and stated that the regulator does not believe that a “relevant merger situation has been created.”

Phil Brunkard, executive counselor at Info-Tech Research Group UK, said, “both Google and Amazon are trying to compete with OpenAI, but it’s interesting that the CMA is focusing on Google when Amazon was just cleared, which raises some questions about consistency.”

While investigations do create some uncertainty, he said, ”Amazon’s clearance hints that Google could have a similar outcome. It seems the CMA is just being thorough, but these investments will likely continue.”

Brunkard said he sees “a two-horse race” forming: Microsoft/OpenAI vs. Google/Amazon and Anthropic, “though I believe a third player could enhance competition. Despite the hurdles, Big Tech will likely drive ahead, and Google or Amazon backing is a solid sign of Anthropic’s potential. Customer confidence in AI startups is likely to be increasingly shaped by the companies that Big Tech chooses to invest in.”

Meanwhile, a spokesperson for the Computer and Communications Industry Association, in a move that was not surprising as the organization is funded by an array of large technology firms, on Thursday criticized the move by the CMA.

Matthew Sinclair, senior director, UK, with the group, said, “another investigation by the competition regulator will create fresh uncertainty for a business that remains a challenger in a dynamic AI sector. Premature competition interventions will make it harder for new AI businesses to collaborate, innovate, and grow.”

The CMA first launched an initial review into the market for AI systems in May 2023, and, in a statement, announced it would focus in on three key areas: how the competitive markets for foundational models and their use could evolve; the opportunities and risks these scenarios could bring for competition and consumer protection; and what guiding principles should be introduced to support competition and protect consumers as AI models develop.

The organization added that the review is in line with the UK government’s aim to support “open, competitive markets.”