How Washington May Approach the Capital One-Discover Deal

Anthropic and the new rules of A.I. deal making

Coming up with innovations in artificial intelligence is hard work. So, too, is raising the seemingly endless amounts of capital needed to finance that, as start-ups like Anthropic illustrate.

To fund the surging levels of computing power needed for A.I. operations, Anthropic has collected more than $7 billion from tech giants like Amazon and Google, as well as from investors led by the venture capital firm Menlo Ventures.

But amassing that money has forced Anthropic — along with rivals like OpenAI and Cohere — be more creative in its fund-raising, The Times’s Erin Griffith and Cade Metz report:

In one of those deals, Anthropic agreed to use technology such as chips and cloud computing services from the companies that invested in it. That meant, in effect, that some of the money it raised would be pumped back into its investors. And to consolidate smaller investors who were interested in Anthropic, Menlo created a legal entity known as a “special purpose vehicle.”

“These deals are so complicated,” said Dave Brown, an Amazon Web Services vice president who was involved in Amazon’s deal with Anthropic.

For all of A.I.’s promise of transforming every aspect of society, it has started by upending Silicon Valley’s start-up deal-making. Young companies typically raise money every 15 months or so, after showing that their businesses have grown. But since generative A.I. — which can generate text, images, sounds and video — burst onto the scene in late 2022, the rule book has been thrown out as investors have fought for a piece of the hottest developers.

That deal making has come under the focus of the F.T.C., which is reviewing the Anthropic investments for potential antitrust violations. Anthropic told The Times that it planned to cooperate with the regulator, while Amazon and Google said that the investments and cloud credit arrangements were made at arm’s length.

• In other A.I. news: The head of Google DeepMind, Demis Hassabis, told Wired that the future of the technology won’t necessarily revolve around products getting bigger.

The week ahead

The Fed, earnings and artificial intelligence will be in focus this week. Here’s what to watch for.

Wednesday: The Fed will release the minutes from its January rate-setting meeting, giving investors new clues on its timeline for lowering interest rates. Hotter-than-expected inflation data last week has forced traders to scale back their bets on imminent cuts.