Google, Microsoft and Amazon Approach Gen AI Differently
There are three frontier LLMs: Google’s “Gemini”, OpenAI’s “GPT” and Anthropic’s “Claude”. It is interesting to think about these three LLMs in relation to Google Cloud, Azure and AWS.
Google: Google can afford to self-fund Gemini - essentially in perpetuity. Given that Google owns Gemini and therefore its IP, Google’s Deepmind business unit controls Gemini’s strategic direction, which to date has been a focus on imbuing Gemini with multi-modality rather than being a text-centric LLM. Microsoft Azure and Amazon’s AWS unit do not have the same level of control over their LLM investments (although both Azure and AWS are starting to build proprietary LLMs).
OpenAI and Microsoft: OpenAI could be self-funded if it was to go public (technically, it would be funded by institutional public equity investors). Given the amount of AI hype in the public markets, OpenAI would capture a whopping Revenue multiple if it was to file to go public today.
OpenAI’s ties to Microsoft provide OpenAI with capital and technical resources (via Azure). As OpenAI scans the landscape, I don’t believe there is any competitor that would give Mr. Altman much concern in the near-to-intermediate term.
However, if I was Microsoft, I would be a bit nervous about outsourcing Gen AI given that MSFT has bet the company on it. There have been publicly aired concerns that Azure employees feel like “tech support” for OpenAI. That is not the culture that a CEO ought to aspire to build if it wishes to be a category leader.
Anthropic and AWS: AWS and Anthropic are in a bit of a pickle. When I think of Gen AI I do not think of AWS. AWS needs to better shape that perception, otherwise it will lose meaningful market share to Azure and Google Cloud over the next decade.
Anthropic will continue to raise private money, unless it was to file to go public, although it is unclear what type of valuation multiple institutional equity investors would award Anthropic.
AWS partners with Anthropic. My view is that as Anthropic requires more and more capital to pay for building ever larger versions of Claude, you will see the company move closer to AWS given that both companies need each other. It would be wise for AWS to move on Anthropic now as an M&A target so that it may shape Anthropic’s strategic direction.