Increasingly, Big Tech Owns Big AI
I feel like I'm taking crazy pills. For all the endless talk about both Big Tech and Big AI, it seems wild how little talk there is around the fact that increasingly, Big Tech owns Big AI. I mean this quite literally, as in ownerships stakes. True, they're not controlling positions, but undoubtedly only because that would actually raise red flags. Instead, these are massive, growing bets that are clear hedges on their own internal AI work, and to try to counter competitors own similar deals.
I've actually written about this a number of times. But with the latest OpenAI and Anthropic funding rounds, it's probably worth updating and spelling it out again. Perhaps a bit more clearly this time, with math...
The numbers below aren't perfect, in part because there have been so many fundraises for each of these companies at increasingly wild valuations. And there are many types of instruments used from Microsoft's original trading of compute for profit-shares to Amazon's seemingly endless convertible notes into Anthropic. But as these companies start to creep up on IPOs, or at least talk about it, they're also clearly getting their books more in order. Sure, they may still be trading compute deals for investments, but at least equity is also trading hands now.
OpenAI
With the most recent $110B round – likely to jump to $120B in order to give them a post-money valuation of $850B (as predicted) – we had Amazon putting in $50B. Granted, it's not that straightforward because they're investing $15B up-front and the additional $35B over time if certain conditions are met (one of which may be the aforementioned IPO, but another might be the far more nebulous AGI). Still, that $15B at $850B is roughly 1.8%. If they invest the full $50B, and assuming it's done on the same terms, that number jumps to 5.9%.
Also in this round, NVIDIA and SoftBank are putting in $30B each. No, it's not the $100B that NVIDIA originally said it would be putting in (over time), which probably would have (eventually) bought them up to 15% of OpenAI, but $30B in this round still buys them about 3.5%. And they had previously invested in the 2024 round that valued OpenAI at $157B. It's unclear how much they invested, but early reports put it around $100M, so it would have been far less than 1% ownership. Let's just guesstimate that the stake is around 4% now.
SoftBank's stake is actually well known thanks to their own regulatory filings and disclosures. Assuming they complete each of the three $10B tranches here, they're total amount invested would be an incredible $64.6B for a stake of "approximately" 13%.
It's not clear if Microsoft is going to participate in this round – they don't seem to be yet, but still could come into the remaining $10B, I suppose. Regardless, they're going to get diluted quite a bit here – their pro rata in this round alone would have been well over $30B! – given that they own a very well-known 27% of OpenAI after the company converted into a PBC. Rough math assuming no (or little) participation likely pushes their stake closer to 23%.
So, if my math is correct, in terms of Big Tech (just going to include SoftBank as Big Tech for these purposes here), the cap table looks like:
Microsoft: 23%
SoftBank: 13%
Amazon: 6%
NVIDIA: 4%
Oracle owns some as well. But these four alone seemingly own almost half of OpenAI now (46%) – or will, if all the promised investments happen. If you want to remove SoftBank, we're still looking at 33% – a full 1/3rd of OpenAI owned by Big Tech.
Anthropic
This one is actually a bit more complicated, perhaps because there's historically been less interest in Anthropic's cap table since they've been a "boring" old PBC the entire time! Still, despite the rhetoric around it being important that Big Tech not own the company – perhaps part of the reason Dario and Daniela Amodei broke away from OpenAI in first place when Microsoft was pumping money in – they're all over the cap table here too.
While investors (and sovereign wealth funds) put up the most recent $30B round (at $380B post), that's only because it was kicked off by massive new investments from NVIDIA and Microsoft. Specifically, $10B from the former, and $5B from the latter. That gives NVIDIA a 2.6% stake and Microsoft a 1.3% stake.
But they actually join more of Big Tech on this cap table here.
The two largest shareholders of Anthropic are Amazon and Google. While there had been some math floating around the past few months putting those stakes around 8% (including when you ask AI), I believe those numbers are faulty, and based on trying to back into numbers from stated mark-ups. But it's a far more complicated cap table due to the aforementioned convertible notes over many years. So it's better to go with actual filings – both legal and regulatory.
From those, we know that Google owned roughly 14% of Anthropic a year ago. They seemingly did not participate in this new round, but like Amazon, may have been doing more convertible notes tied to commercial agreements along the way. Still, we can probably dilute them a bit, down to say 13%.
And in May of last year, a 10-Q filing revealed that Amazon valued their stake at $13.8B – which importantly included both their stock and convertible note holdings. If we assume that was valued at the $61.5B valuation at the time, that's a 22.4% stake.
(The more recent 10-K separates the preferred stock FMV – $14.8B – and convertible notes FMV – $45.8B! – again, in part because there have seemingly been several recent notes. That plus this most recent round, which was in process but not completed yet, makes it a bit harder to calculate, but it still points to ownership likely in the 20% range.)
Again, with the caveats, this all shapes up to:
Amazon: 20%
Google: 13%
NVIDIA: 2.6%
Microsoft: 1.3%
This adds up to just about 37% ownership stake big Big Tech.
Cut another way, when it comes to ownership of the "Big Two" Big AI players:
- Amazon: 26% (20% Anthropic, 6% OpenAI)
- Microsoft: 24.3% (23% OpenAI, 1.3% Anthropic)
- Google: 13% (13% Anthropic, 0% OpenAI)
- SoftBank: 13% (13% OpenAI, 0% Anthropic)
- NVIDIA: 6.6% (4% OpenAI, 2.6% Anthropic)
The Apple Outlier
In this light, Apple is once again glaringly absent. Yes, they almost bought a stake in – and a board observer role at – OpenAI (after their AI partnership), before backing away at the last minute. And yes, they almost cut a massive deal with Anthropic (might it have included an investment, or just a straight-up cash payment?), but instead they're paired up with... Google. Undoubtedly not a bad bet, but still, a weird outlier versus their peer group here! Then again, their entire AI strategy is obviously an outlier.
Others
Well there is one other absent Big Tech player: Meta. They also have their own famously chaotic AI situation at the moment. But while they have some key AI investments, most notably Scale.ai where they own 49% (in exchange for taking the key team off their hands) and Safe Superintelligence (where they took a co-founder of their hands), they don't have stakes in OpenAI or Anthropic.
They do – or will – have a stake in AMD though, it seems! (As will OpenAI...)
If you want Big Tech to include Tesla, obviously they're going to be aligned with Elon Musk's AI play, and seemingly now have an investment in xAI as well (even though their shareholders technically didn't vote for the investment). It's undoubtedly just a matter of time before Tesla is part of the SpaceX/xAI conglomerate forming in real time.
Anyway...
For all the endless talk of circular deals in AI, it feels like there's relatively little chatter about the fact that Big Tech, which is working on building out their own versions of AI that they hope the masses will use, is also heavily invested in the "pure play" AI players – Big AI – that everyone is increasingly using.
There are some downsides with this – see: Microsoft and OpenAI – and there are some do-not-cross lines (at least for now) perhaps with OpenAI and Google, for example. But for the most part, it seems like some pretty straightforward hedging with BD deal upside to boot! Heads they win, tails they win...
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler
M.G. Siegler