Amazon has invested $2.75 billion in Anthropic, an AI startup, bringing its total investment to $4 billion.

The deal, first reported by The New York Times, sees Amazon exercising its option to convert earlier funding into equity in Anthropic. It solidifies a partnership between the two companies that involves Anthropic using Amazon Web Services (AWS) data centers and Amazon’s custom-designed computer chips to power its operations.

Anthropic has become a leading company in the rapidly growing field of generative AI. It was founded in 2021 by former OpenAI researchers, Dario and Daniela Amodei. The company has raised billions of dollars from investors who are eager to invest in AI technology. Its main product is Claude – a chatbot that can engage in freeform conversation and handle complex queries and instructions.

Unlike some competitors, Anthropic has emphasized developing AI technologies responsibly and safely. In early March, it rolled out an updated version of Claude designed to be better at following complicated instructions while being less prone to hallucinating or fabricating information.

“We have a notable history with Anthropic, together helping organizations of all sizes around the world to deploy advanced generative artificial intelligence applications across their organizations,” said Dr. Swami Sivasubramanian, vice president of Data and AI at AWS. “Anthropic’s visionary work with generative AI, most recently the introduction of its state-of-the art Claude 3 family of models, combined with Amazon’s best-in-class infrastructure like AWS Tranium and managed services like Amazon Bedrock further unlocks exciting opportunities for customers to quickly, securely, and responsibly innovate with generative AI. Generative AI is poised to be the most transformational technology of our time, and we believe our strategic collaboration with Anthropic will further improve our customers’ experiences, and look forward to what’s next.”

Anthropic’s massive new funding highlights the huge bets being made on generative AI by Big Tech. Google is also an investor and cloud partner with the startup, leading a $450 million round last year. Microsoft has gone all-in on OpenAI, pumping billions into the creator of ChatGPT and aiming to infuse its products with the viral chatbot’s capabilities.

The AI arms race is being fueled by rapid advancements in large language models, the machine learning systems that underpin modern chatbots and other generative AI applications. By training on vast datasets, these models can produce remarkably humanlike text on almost any topic.

While extraordinarily capable, the technology also raises concerns around potential misuse, bias, and the erosion of certain types of skilled labor. Anthropic’s responsible AI focus could give it an edge if it can continue pushing boundaries while mitigating risks.

For Amazon, the Anthropic investment complements its own in-house AI initiatives like the Alexa virtual assistant and Amazon CodeWhisperer, a programming aid. Integrating Anthropic’s work could supercharge some of its core businesses like e-commerce and cloud computing.