In a bid to compete with a slew of A.I.-enabled voice assistants like Microsoft (MSFT)’s Copilot, Google’s Gemini and even Apple’s Siri, Amazon (AMZN) will soon upgrade Alexa to be powered by Anthropic’s Claude A.I. model, Reuters reported on Friday (Aug. 30). The upgraded version of Alexa is expected to constitute the first major update to Amazon’s decade-old feature and will include a trove of new features, from remembering morning alarm preferences to offering shopping advice and news summaries, according to Reuters, which cited sources familiar with Amazon’s Alexa strategy.
Amazon CEO Andy Jassy hinted at the company’s plans for Alexa in an April shareholder letter, where he said that generative A.I. applications would help build “an even more intelligent and capable” version of the tool in the future. While Amazon will reportedly maintain its current and free version of Alexa, the Claude-powered upgrade will cost between $5 and $10 per month. Assuming one in five of the 500 million Alexa-enabled devices sold by Amazon are currently active with 10 percent willing to pay for Alexa, this would translate to Amazon receiving between $600 million to $1.2 billion in revenue annually from the assistant, according to estimates from Bank of America analyst Justin Post.
While Amazon’s own Titan large language model will still be integrated into the voice assistant, the company “uses many different technologies to power Alexa,” said Amazon in a statement shared with Observer. “When it comes to machine learning models, we start with those built by Amazon, but we have used, and will continue to use, a variety of different models—including Titan and future Amazon models, as well as those from partners—to build the best experience for customers.” Anthropic declined requests for comment from Observer.
Amazon’s partnership with Anthropic
The move signifies a strengthening of ties between Anthropic and Amazon, which is one of the A.I. startup’s most significant backers with a $4 billion investment. Like other major A.I. partnerships, the tie-up between the two companies has come under heightened antitrust scrutiny in recent months. In August, U.K.’s Competition and Markets Authority (CMA) launched a formal probe into whether their partnership constitutes a de facto merger.
Founded in 2021 by former OpenAI employees Dario Amodei and Daniela Amodei, Anthropic makes a competing product to OpenAI’s ChatGPT. Anthropic has poached several of OpenAI’s top executives, and its partnerships with other tech companies have picked up steam in recent months, positioning the startup as a powerful competitor against OpenAI, which has significant ties to Microsoft and Apple (AAPL).
Besides its connection to Amazon, which first invested $1.25 billion into Anthropic in September 2023, followed by another $2.75 billion earlier this year, Anthropic is backed by $2 billion from Google. It also counts Menlo Ventures among its investors and in July launched a $100 million fund with the venture capital firm that will see Anthropic provide use of Claude to new startups. Its customers currently include the likes of Perplexity AI, an A.I.-powered search engine that uses Claude to enhance its results, and Scribd, a digital library of documents that generates metadata via Anthropic’s technology.