Google Anthropic UK Merger Probe: Is Britain Stifling AI Innovation?

• The Competition and Markets Authority launched a merger probe into Google and Anthropic.
• Google previously said the country risks falling behind in AI innovation if action is not taken.
• The merger probe has raised fears that the U.K. is stifling innovation and disincentivizing future investment.

The U.K. antitrust watchdog has launched a merger probe into Google’s planned $2 billion investment in AI startup Anthropic, marking the latest in the country’s crackdown on Big Tech.

The Competition and Markets Authority announced last week that it was opening the formal first step of an investigation into the partnership, raising fears that the U.K. could be preventing innovation and future investment.

Google’s Anthropic Merger

After partnering for a significant cloud licensing agreement, Google pledged to invest $2 billion into Anthropic last year.

Anthropic, founded in 2021 by former OpenAI employees, has found success with its ChatGPT competitor, Claude.

A spokesperson for the startup said it intended to work with the CMA and “provide them with the complete picture about Google’s investment and our commercial collaboration.”

The CMA set a deadline on Dec. 19 to decide whether to escalate to a more in-depth study.

Concerns of Stifled Innovation

The CMA probe has faced criticism from industry leaders who fear the investigation could work against future AI innovation and investment in the country.

Adam Levine, business coach at InnerXLab, told CCN that when companies expect stringent oversight, their creative resources often get diverted toward compliance rather than invention.

“In the case of a $2 billion investment, there’s potential for significant AI breakthroughs,” Levine said.

Google and Anthropic plan to iterate on large-scale AI architectures, and their combined efforts may yield new techniques for training and fine-tuning their models.

“Such scrutiny can lead to an overemphasis on risk management, curbing the bold and calculated risk-taking essential for creativity,” Levine added.

The U.K.’s Hope For Investment

In September, Debbie Weinstein, vice president and managing director of Google U.K. & Ireland, said that AI-powered innovation could create over £400 billion in economic value for the country by 2030.

The director shared a stark warning to the U.K. that the country could risk falling behind globally if it didn’t set a detailed opportunity agenda.

“The U.K. needs to develop a comprehensive and thoughtful strategy that ensures it can stay ahead,” Weinstein said.

A Warning to Stay Competitive

On Thursday, Rachel Reeves, Chancellor of the Exchequer, delivered the U.K. Labour government’s first budget. The budget highlighted Labour’s different investment priorities from those of the previous Conservative government.

Unlike the Conservative party, which favored pro-innovation economic policies, Labour has shown more interest in funneling investment to industries such as EVs and clean energy.

However, with the stringent probes on Big Tech, some believe the U.K. could risk pushing away investment.

“We risk creating an atmosphere filled with anxiety rather than promising fields of opportunity,” Levine said.

Peter Wood, Spectrum Search’s Chief Technical Officer, told CCN that the CMA’s suspicion of Big Tech could disincentivize further investment in the country.

“If companies get the sense that Britain’s becoming a tricky place to collaborate or get funding, there’s a good chance they’ll start eyeing up places with a lighter regulatory touch, like the US or even parts of the EU where AI talent is being wooed with open arms,” Wood said.

“AI projects, especially at the level of Google and Anthropic, need serious backing. If the big players feel they’ll face a hassle with every investment, they might pack up their checkbooks and head elsewhere.”

Alex Haffner, a competition lawyer and partner at U.K. law firm Fladgate, echoed these same beliefs. However, Haffner noted that no investigations from the CMA have led to “any remedies being imposed.”

“…and it will argue that it reviews each transaction on its facts and by reference to previously published policy guidelines,” Haffner told CCN.

Anthropic Under Close Watch

Anthropic’s business deals have been under the scrutiny of the CMA, which is increasingly seeking to crack down on Big Tech’s dominance in the industry.

In August, the U.K. watchdog announced it was opening an investigation into Amazon’s investments in the AI startup.

The e-commerce giant has invested around $4 billion since Anthropic’s inception, raising concerns from the CMA that a merger may be occurring.

Anthropic denied the claims at the time, insisting it was an “independent company.”

“Amazon does not have a seat on Anthropic’s board, nor does it have any board observer rights,” a spokesperson said.