To win the artificial intelligence race, Google not only has developed its own technologies, but has also pumped money into prominent A.I. start-ups. And to preserve its competitive edge, Google has kept its ownership stakes in those start-ups a secret.
Court documents recently obtained by The New York Times reveal Google’s stake in one of those start-ups, Anthropic, as well as how its investment in the young company is set to change.
Google owns 14 percent of Anthropic, according to legal filings that the A.I. start-up submitted as part of a Google antitrust case. But that investment gives Google little control over the company. The internet giant can own only up to 15 percent of Anthropic, according to the filings, and Google holds no voting rights, no board seats and no board observer rights at the start-up.
Still, Google is set to invest an additional $750 million in Anthropic in September through a type of loan known as convertible debt, according to the filings. The companies agreed to the convertible note in 2023. In total, Google has invested more than $3 billion in the A.I. company.
The filings offer a rare glimpse into a big tech company’s investment in an A.I. start-up. Such investments have been under scrutiny by regulators, who questioned whether the deals gave incumbents an unfair advantage in the rapidly evolving and powerful technology. Apart from Google, Amazon and Microsoft have also invested in high-profile A.I. start-ups such as Anthropic and OpenAI, the maker of the ChatGPT chatbot.
“A big company like Google knows that there is a race to A.I., and it has a big enough cash pile that it can bet on multiple horses,” said Chris V. Nicholson, an investor with the venture capital firm Page One Ventures who focuses on A.I. technologies.
Anthropic’s filings emerged in a landmark Google antitrust case over online search. In August, a federal court found that Google had acted as a monopolist in internet search, violating the law.
To remedy the situation, the Justice Department, which brought the case against Google, had proposed that the court force the Silicon Valley company to sell any A.I. products that could compete with search. That could have included Google’s stake in Anthropic, which makes a chatbot called Claude that people could turn to for search queries.
On Friday, the Justice Department pulled back on that proposal, arguing that Google should be required to notify government officials only before it makes investments in A.I.
Anthropic filed the documents viewed by The Times before the Justice Department changed course. The filings on the public docket contain redactions. Anthropic’s law firm sent an unredacted copy of its filings to The Times, which has argued for greater public access to the antitrust case.
In the unredacted filings, Anthropic said Google should not be forced to divest its stake in the start-up. That “would harm both Anthropic and competition more generally” by depressing the young company’s market value and hindering its ability to raise capital, Anthropic’s lawyers wrote.
Tom Brown, an Anthropic co-founder, added that the start-up would “suffer grievous harm” if Google was forced to sever their relationship, the documents showed.
Google declined to comment on the financial terms of its Anthropic stake. It said it had made equity investments in a number of companies to make a return and grow the market. Anthropic declined to comment.
Anthropic was founded in 2021 by Dario Amodei and his sister Daniela Amodei, who had left OpenAI after disagreements over how its technologies were being funded and released through Microsoft. They created Anthropic to build A.I. with safety guardrails, and structured the company as a public benefit corporation, which is aimed at creating public and social good.
(The Times has sued OpenAI and Microsoft, accusing them of copyright infringement of news content related to A.I. systems. OpenAI and Microsoft have denied those claims.)
Anthropic has worked to ensure that it is not owned or dominated by a single tech giant, according to the court filings. In total, the company has raised more than $14.8 billion from venture capital firms such as Menlo Ventures.
In 2023, Google invested more than $2 billion in Anthropic. That same year, Amazon invested $4 billion in Anthropic, followed by an additional $4 billion last year.
Today, Google’s investment in Anthropic is worth a “significant amount more” than the start-up’s latest funding round, which closed this month, according to the court filings. The financing valued Anthropic at $61.5 billion.
Anthropic buys large amounts of computing power from Google and Amazon to build its A.I. systems and has agreed to use chips and cloud computing services from some of the companies that invested in it. That effectively means that some of the money it raised is pumped back into its investors.