UK competition regulator to investigate Alphabet’s investment in Anthropic

The U.K.’s Competition and Markets Authority (CMA) is launching a formal probe into Alphabet’s investment in AI rival, Anthropic.

The investigation comes three months after the CMA confirmed it was inviting “interested parties” to comment on Alphabet’s various investments in Anthropic, which includes a reported $300 million early last year followed by another reported $2 billion.

The probe being launched now is part of a multi-pronged investigation designed to tackle the so-called “quasi-merger,” which has seen big tech firms take a fresh approach to gaining control of innovative young startups by, for example, hiring startup founders and technical talent, as well as making strategic investments.

Beyond Alphabet’s own investments in Anthropic, the three-year-old San Francisco startup has been courting other big-name investors, including Amazon, which has invested $4 billion in the startup. The CMA had been sniffing around that partnership, too, but last month it concluded that it couldn’t investigate the deal under current merger rules due to the size and scope of the deal.

The fact that the CMA has decided that Alphabet’s investment in the same startup does qualify as a “relevant merger situation” is telling. It suggests that the terms of Alphabet’s investment in Anthropic are different from those of Amazon’s, or that Alphabet’s deal will harm competition in a way that the Amazon partnership wouldn’t.

In a statement issued to TechCrunch, a spokesperson for Alphabet subsidiary Google said that “Anthropic is free to use multiple cloud providers and does, and we don’t demand exclusive tech rights.”

The CMA, meanwhile, said it has “sufficient information” regarding the partnership to begin an investigation before deciding whether to refer the case to a more in-depth “phase 2” investigation. This decision is expected by December 19, 2024.

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