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| ▲ | wcunning 3 days ago | parent | next [-] | | That’s honestly one of the hardest things in engineering — identifying not just a customer to drive requirements, but a knowledgeable customer who can drive good requirements that work for a broader user base and can drive further expansion. Anthropic seems ideal for that, plus they act as a service/API provider on AWS. | | |
| ▲ | antupis 3 days ago | parent [-] | | Yeah this working with knowledgeable customer is like magic. |
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| ▲ | dzonga 3 days ago | parent | prev | next [-] | | or simply one of the best corporate buyouts that's not subject to regulatory scrutiny. microsoft owns 49% of OpenAI - will get profits till whenever. All without subject to regulatory approval. and they get to improve Azure | | |
| ▲ | rty32 3 days ago | parent [-] | | A caveat -- FTC is currently looking into the deal between Microsoft and OpenAI. | | |
| ▲ | salad-tycoon 2 days ago | parent [-] | | A lot could change in the future and what’s the worse they could do? A billiokn dollar fine? Bold, do it and ask for forgiveness later. |
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| ▲ | fny 3 days ago | parent | prev | next [-] | | And Amazon can always build their own LLM product down the line. Building out data centers feels like a far more difficult problem. | | |
| ▲ | diggan 3 days ago | parent | next [-] | | > Building out data centers feels like a far more difficult problem. Is it really? I'm thinking it might be more time-and-money-involved than building a "LLM product" (guess you really meant models?), but in terms of experience, we (humanity) have decades of experience building data centers, while a few years (at most) experience regarding anything LLM. | |
| ▲ | bittermandel 3 days ago | parent | prev [-] | | I'd say building datacenters is a commodity these days. There's countless actors in this field who are thriving. | | |
| ▲ | ralgozino 3 days ago | parent [-] | | Absolutely, you can even buy a pre built datacenter from companies like Huawei or Schneider and get it shipped, plug power and network and be online. |
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| ▲ | whatshisface 3 days ago | parent | prev [-] | | This explanation makes no sense, I could be AWS' biggest customer if they wanted to pay me for it. Something a little closer could be that the big tech companies wanted to acquire outside LLMs, not quite realizing that spending $1B on training only puts you $1B ahead. | | |
| ▲ | raverbashing 3 days ago | parent [-] | | Yes but Amazon is not making extra money with you being their biggest customer With Anthropic yes | | |
| ▲ | whatshisface 3 days ago | parent [-] | | Anthropic is getting $4B in investment in a year where their revenue was about $850M. Even if Amazon had bought them outright for that much, they would not be ahead. The fact that everybody keeps repeating the claim that Amazon is "making money" makes this appear like some kind of scam. | | |
| ▲ | mbesto 3 days ago | parent | next [-] | | This is not how it works. First, revenue is irrelevant. Second, the investment isn't a loan that they need to repay. They are getting equity. Third, Anthropic is exclusively using AWS to train its models. Which, yes, means if AWS gives them $4B and it costs them $500M/year to pay for AWS services then after 8 years, the cash is a wash. However this ignores the second point. Fourth, there is brand association for someone who wanted to run their own single tenant instance of Claude whereby you would say "well they train Claude on AWS, so that must be the best place to run it for our <insert Enterprise org>" similar to OpenAI on Azure. Fifth, raising money is a signaling exercise to larger markets who want to know "will this company exist in 5 years?" Sixth, AWS doesn't have its own LLM (relative to Meta, MS, etc.). The market will associate Claude with Amazon now. | | |
| ▲ | warkdarrior 3 days ago | parent | next [-] | | > Sixth, AWS doesn't have its own LLM (relative to Meta, MS, etc.). The market will associate Claude with Amazon now. Amazon/AWS has their line of Titan LLMs: https://aws.amazon.com/bedrock/titan/ | | | |
| ▲ | whatshisface 3 days ago | parent | prev [-] | | The difference between things you'd say like "it's true that..." and "the market will associate..." basically is the definition of a scam. | | |
| ▲ | Spooky23 3 days ago | parent | next [-] | | It’s not a scam at all. Amazon doesn’t have an AI story. So they invest in Anthropic, get a lot of that money back as revenue that seeds demand. Their customers now have an incentive to do AI in AWS. That drives more revenue for AWS. | | |
| ▲ | donavanm 3 days ago | parent [-] | | > Amazon doesn’t have an AI story. A quibble: AWS _does_ have an AI story (which i was originally dismissive of): Bedrock as a common interface and platform to access your model of choice, plus niceties for fine tuning/embeddings/customization etc. Unlike say Azure theyre not betting on _a_ implementation. Theyre betting that competition/results between models will trend towards parity with limited fundamental differentiation. Its a bet on enterprises wanting the _functionality_ more generally and being able to ramp up that usage via AWS spend. WRT titan my view is that its 1) production r&d to stay “in the game” 2) a path towards commoditization and lower structural costs, which companies will need if these capabilities are going to stick/have roi in low cost transactions. | | |
| ▲ | Spooky23 3 days ago | parent [-] | | Sure they do, but it doesn’t have a ton of traction relative to the size of AWS. |
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| ▲ | mbesto 3 days ago | parent | prev [-] | | Ummm okay? A scam implies someone is getting hurt (financially, emotionally, etc.). Who's getting scammed here? | | |
| ▲ | whatshisface 3 days ago | parent [-] | | The big tech companies are spending enormous amounts for part ownership in startups whose only assets are knowledge that exists in the public domain, systems that the companies could have engineered themselves, and model weights trained with the buyer's own capital. The people who will get hurt are public investors who are having their investment used to make a few startup people really rich. | | |
| ▲ | prewett 3 days ago | parent | next [-] | | > whose only assets are knowledge Knowledge is quite the useful asset, and not easily obtained. People obtain knowledge by studying for years and years, and even then, one might obtain information rather than knowledge, or have some incorrect knowledge. The AI companies have engineered a system that (by your argument) distills knowledge from artifacts (books, blogs, etc.) that contain statements, filler, opinions, facts, misleading arguments, incorrect arguments, as well as knowledge and perhaps even wisdom. Apparently this takes hundreds of millions of dollars (at least) to do for one model. But, assuming they actually have distilled out knowledge, that would be valuable. Although, since the barrier to entry is pretty low, they should not expect sustained high profits. (The barrier is costly, but so is the barrier to entry to new airlines--a few planes cost as much as an AI model--yet new airlines start up regularly and nobody really makes much profit. Hence, I conclude that requiring a large amount of money is not necessarily a barrier to entry.) (Also, I argue that they have not actually distilled out knowledge, they have merely created a system that is about as good at word association as the average human. This is not knowledge, although it may have its own uses.) | |
| ▲ | kelnos 3 days ago | parent | prev | next [-] | | If they could build it themselves, why haven't they? Say what you want about Amazon, but I find it hard to believe that Anthropic bamboozled them into believing they can't build their own AI when they could do it cheaper. | |
| ▲ | PittleyDunkin 3 days ago | parent | prev [-] | | If the scam only hurts investors i'd say it's likely a net benefit to humanity. |
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| ▲ | throwup238 3 days ago | parent | prev | next [-] | | Last I checked, AWS reserve pricing for one year of an 8x H100 pod costs more than just buying the pod yourself (with tens of thousands left over per server for the NVIDIA enterprise license and to hire people to manage them). On demand pricing is even worse. This is essentially money that they would have spent to build out their cloud anyway, except now they also get equity in Anthropic. Whether or not Anthropic survives, AWS gets to keep all of those expensive GPUs and sell them to other customers so their medium/long term opportunity cost is small. Even if the deal includes cheaper rates the hardware still amortizes over 2-3 years, and cloud providers are running plenty of 5+ year old GPUs so there's lots of money to be made in the long tail (as long as ML demand keeps up). They're not making money yet because there's the $4 billion opportunity cost, but even if their equity in Anthropic drops to zero, they're probably still going to make a profit on the deal. If the equity is worth something, they'll make significantly more money than they could have renting servers. Throw financial engineering on top of that, and they may come out far ahead regardless of what happens to Anthropic: Schedule K capital equipment amortizations are treated differently from investments and AFAICT they can double dip since Anthropic is going to spend most of it on cloud (IANAL). That's likely why this seems to be cash investment instead of in-kind credits. I think that’s what people mean when they say Amazon is making money off the deal. It’s not an all or nothing VC investment that requires a 2-3x exit to be profitable because the money just goes back to AWS’s balance sheet. | | |
| ▲ | AgentOrange1234 3 days ago | parent [-] | | Yes and it’s also interesting that they mention using Trainium to do the training. I don’t know how much spend that is, but it seems really interesting. Like, if you’re AWS, and you imagine competing in the long run with NVIDIA for AI chips, you need to fund all that silicon development. | | |
| ▲ | axpy906 3 days ago | parent [-] | | They mentioned that in the last investment too. That seems like marketing to me as no one is doing bleeding edge research outside of the NVIDIA CUDA run ecosystem. |
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| ▲ | wepple 3 days ago | parent | prev | next [-] | | Wow, I had no idea Anthropic was doing $850m revenue. I know they have high costs, but as a startup that’s some phenomenal income and validation that they’re not pure speculation like most startups are Edit: founded in 2021 and with 1000 employees. That’s just wild growth. | |
| ▲ | phillipcarter 3 days ago | parent | prev | next [-] | | This is a way to keep the money printer called AWS Bedrock going and going and going. Don't underestimate the behemoth enterprises in the AWS rolodex who are all but assured to use that service for the next 5+ years at high volume. | |
| ▲ | vineyardmike 3 days ago | parent | prev | next [-] | | These sort of investments usually also contain licensing deals. Amazon probably gets Anthropic models they can resell “for free”. The 850M revenue is Anthropic’s, but there is incremental additional revenue to AWS’s hosted model services. AWS was already doing lots of things with Anthropic models, and this may alter the terms more in amazons favor. Are they actually making money? I don’t know, investments aren’t usually profitable on day one. Is this an opportunity for more AWS revenue in the future? Probably. | | |
| ▲ | celestialcheese 3 days ago | parent [-] | | And access to use anthropics models internally, where you have some guarantees and oversight that your corp and customer data aren't leaking where you don't want it to. |
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| ▲ | 3 days ago | parent | prev | next [-] | | [deleted] | |
| ▲ | surgical_fire 3 days ago | parent | prev [-] | | It appears to be a scam because it sort of is. AI needs to be propped up because the bug tech cloud providers they depend on need AI to be a thing to justify their valuations. Tech is going through a bit of a slump where all things being hyped a few years ago sort of died down (crypto? VR? Voice assistants? Metaverse?). Nobody gets very hyped about any of those nowadays. I am probably forgetting a couple of hyped things that fizzled out over the years. Case in point, as much as I despise Apple, they are not all-in the AI bandwagon because it does nothing for them. | | |
| ▲ | vineyardmike 3 days ago | parent | next [-] | | Go look at earnings reports for big tech companies. AI is definitely driving incremental revenue. Apple is definitely on the AI bandwagon, they just have a different business model and they’re very disciplined. Apple tends not to increase research and investment costs faster than revenue growth. You’ll also notice rumors that they’re lowering their self driving car and VR research goals. | | |
| ▲ | surgical_fire 3 days ago | parent [-] | | > Go look at earnings reports for big tech companies. AI is definitely driving incremental revenue. Yes. Which proves my point. | | |
| ▲ | vineyardmike 3 days ago | parent [-] | | Google Cloud revenue up 35% thanks to AI products [1,4,5]. Azure sales by a similar amount (but only 12% was AI products [2]. AWS is up too [3]. In so glad your point was that it’s not a scam, and there are billions of dollars in real sales occurring at a variety of companies. It’s amazing what publicly traded companies disclose if we only bother to read it. I’m glad we’re all not in the contrarian bubble where we have to hate anything with hype. 1. https://technologymagazine.com/articles/how-ai-surged-google... 2. https://siliconangle.com/2024/10/30/microsofts-ai-bet-pays-o... 3. https://www.ciodive.com/news/AWS-cloud-revenue-growth-AI-dem... 4. https://www.reuters.com/technology/google-parent-alphabet-be... 5. https://fortune.com/2024/10/29/google-q3-earnings-alphabet-s... | | |
| ▲ | surgical_fire 3 days ago | parent [-] | | > In so glad your point was that it’s not a scam Except it sort of is. It needs AI to be hyped and propped up, so that all those silly companies spending in GCP can continue to do so for a wee bit longer. | | |
| ▲ | dartos 3 days ago | parent [-] | | I don’t know if that makes it a scam. I think you’re putting the cart before the horse. Big cloud providers will push anything that would make them money. That’s just what marketing is. AI was exciting long before big cloud providers even existed. Once it was clear that a product could be made, they started marketing it and selling the compute needed. What’s the scam? | | |
| ▲ | jacobsimon 3 days ago | parent | next [-] | | I think the implication of the top comment is that cloud providers are buying revenue. When we say that cloud provider revenue is "up due to AI", a large part of that growth may be their own money coming back to them through these investments. Nvidia has been doing the same thing, by loaning data centers money to buy their chips. Essentially these companies are loaning each other huge sums of money and representing the resulting income as revenue rather than loan repayments. To be clear, it's not to say that AI itself is a scam, but that the finance departments are kind of misrepresenting the revenue on their balance sheets and that may be security fraud. | |
| ▲ | surgical_fire 3 days ago | parent | prev [-] | | Crypto was exciting too. And metaverse. And VR. And voice assistants. Et cetera and so forth. All those things would change the world, and nothing would ever be the same, and would disrupt everything. Except they wouldn't and they didn't. The scam is that those companies don't want to be seen as mature companies, they need to justify valuations of growth companies, forever. So something must always go into the hype pyre. By all means, I hope the scam goes on for longer, as it indirectly benefits me too. But I don't have it in my heart to be a hypocrite. I will call a pig a pig. | | |
| ▲ | dartos 3 days ago | parent | next [-] | | I think AI isn’t the same as crypto or metaverse. The LLMs and image generation models have obvious utility. They’re not AGI or anything wild like that, but they are legitimately useful, unlike crypto. VR didn’t fail, it just wasn’t viral. Current VR platforms are still young.
The internet commercially failed in 2001, but look at it now. Crypto the industry, imo, is a big pyramid scheme. The technology has some interesting properties, but the industry is scammy for sure. Metaverse wasn’t even an industry, it was a buzzword for MMOs during a time when everyone was locked at home. Not really interesting. I don’t think it’s wise to lump every market boom together. Not everything is a scam. | |
| ▲ | fakedang 3 days ago | parent | prev [-] | | People are losing jobs because of AI. Like it or not, as imperfect as AI may be, AI is having a real world disruptive impact, however negative it may be. Customer service teams and call centers are already being affected by AI, and if they aren't being smart about it, being rendered obsolete. A lot of folks here seem to look at AI through examples of YC companies apparently. Step back and look instead at the kind of projects technology consultancies are taking up instead - they are real world examples of AI applications, many of which don't even involve LLMs but other aspects such as TTS/STT, image generation, transcription, video editing, etc. Way too many freelancers have begun complaining about how their pipelines have been zilch in the past two years. | | |
| ▲ | surgical_fire 3 days ago | parent | next [-] | | That was, perhaps, the only good retort made so far. Yes, call centers and customer service is being affected, although it is unclear to me if the cost-benefit make sense when AI stops being heavily subsidized - I may be wrong, but my impression is that AI companies bleed money not only with training, but in running the models, and the actual cost of those services for it to make sense will need to be substantially higher than they are right now. | | |
| ▲ | MVissers 3 days ago | parent [-] | | Price dropping is just a matter of time. Compute gets cheaper and the models get better. We’ve seen 100x drop in price for same capabilities in ~2 years. Don’t forget about writers and designers losing jobs as well. If you’re not absolute top and don’t use AI, AI will replace you. |
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| ▲ | dartos 3 days ago | parent | prev [-] | | There are also a lot of macroeconomic changes making hiring contractors (or anyone, really) a less attractive option at least in the US. |
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| ▲ | herval 3 days ago | parent | prev | next [-] | | > Case in point, as much as I despise Apple, they are not all-in the AI bandwagon because it does nothing for them. not sure if you've been paying attention, but AI is literally _the only thing_ Apple talks about these days. They literally released _an entire generation of devices_ where the only new thing is "Apple Intelligence" | | |
| ▲ | staticman2 3 days ago | parent [-] | | Is Apple investing in AI as much as Google, Meta, Microsoft, and xAI? If not they are not "all in". | | |
| ▲ | adgjlsfhk1 3 days ago | parent | next [-] | | they are investing differently. Apple has a much more captive audience than the others, and as such is focused on AI services that can be run on device. as such, they aren't doing the blessing edge foundation modern research, but instead putting a ton of money into productionizing smaller models that can be run without giant cloud compute. | |
| ▲ | herval 3 days ago | parent | prev [-] | | They don’t disclose it, but I’d imagine so. They also admit to being a couple of years late, so they’re accelerating (as per their last earnings call) |
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| ▲ | herval 3 days ago | parent | prev [-] | | Trivia: not sure if you’re aware, but there’s billion dollar companies in all these spaces you claim “nobody cares about”. Every single stock broker in the US trades crypto now. Omniverse earns Nvidia a ton of money, Apple earned a billion dollars with a clunky v1 and Meta is selling more and more Quests every half. | | |
| ▲ | asadotzler 3 days ago | parent | next [-] | | Apple has spent over $10B on AVP and made back less than 10% of that with no signs of improvement in the next year or two and continued big spending on dev and content. Meta has spent over $50B on Quest and the Metaverse with fewer than 10M MAU to show for it. If you think those are successes, I'll go out and get several bridges to sell you. Meet me here tomorrow with cash. | |
| ▲ | surgical_fire 3 days ago | parent | prev [-] | | Yeah. Was not really a world changer as it was claimed to be during hype cycle. Billion dollar valuation for a conpany in a given space is not as impressive as you think it is. Do I need to mention some high profile companies with stellar valuations that are sort of a joke now? We can work together on this ;) |
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