British competition watchdog decides Alphabet’s partnership with AI startup Anthropic does not qualify for investigation

The British competition regulator has handed Alphabet some welcome news on this side of the pond, even as Google faces a potential breakup of its business in the United States.

On Tuesday the UK’s Competition and Markets Authority (CMA) announced that it has “decided that Alphabet’s partnership with Anthropic does not qualify for investigation under the merger provisions of the Enterprise Act 2002.”

The CMA scrutiny comes after it was revealed in February 2024 that Google’s parent Alphabet had invested about $300 million (£249m) in Anthropic, as investment in the sector heated up following the runaway success of Microsoft-backed OpenAI and its ChatGPT generative text tool.

CMA probe

Google’s arrangement with Anthropic included a large cloud services contract, but this did not mean that Anthropic has to only use Google’s cloud services.

This may be due to the fact that Anthropic has received much larger amounts of funding from another big name tech firms, including much larger investments from Amazon (the CMA cleared Amazon’s $4 billion Anthropic investment in September 2024).

Earlier this month it was reported that Amazon was in talks to make another huge financial investment in Anthropic.

The condition is that Amazon wants Anthropic to use Amazon-developed silicon hosted on Amazon Web Services (AWS) to train its AI.

Alphabet’s February investment in Anthropic had been noted by British antitrust officials, and the CMA in July said it was “considering whether it is or may be the case that Alphabet’s partnership with Anthropic has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002.

It then invited feedback and comments on the partnership from any interested party.

Last month the CMA announced it would begin an Phase 1 investigation, and on 19 December 2024 would state whether the probe revealed enough to justify a full Phase 2 investigation.

Investigation closed

But just a month after it opened a phase one investigation, the UK competition regulator reached a conclusion that the deal did not warrant further investigation.

The CMA noted that both Google and Anthropic offer, “through Gemini and Claude, two of the leading FMs in an evolving market as well as downstream AI applications, such as chatbots. There is also a vertical relationship between the Parties as Google provides compute and distribution services to FM developers, including Anthropic.”

“The CMA does not believe that Google has acquired material influence over Anthropic as a result of the Partnership,” the regulator stated. “The available evidence did not indicate that Google has the ability to exercise material influence over Anthropic through the Partnership.”

“In relation to the second criterion for jurisdiction, the CMA found that the UK turnover test was not met, as Anthropic’s UK turnover does not exceed £70 million in the UK,” the CMA added. “The CMA considered whether the UK share of supply test could be met, including on the basis that the Parties currently offer two of the leading FMs globally. However, the CMA did not need to reach a conclusion on share of supply as the Partnership does not meet the first criterion.”

“The CMA does not therefore believe that it is or may be the case that a relevant merger situation has been created,” it concluded.