Amazon says it'll spend $230 million on generative AI startups

Amazon says that it will commit up to $230 million to startups building generative AI-powered applications.

The investment, roughly $80 million of which will fund Amazon's second AWS Generative AI Accelerator program, aims to position AWS as an attractive cloud infrastructure choice for startups developing generative AI models to power their products, apps and services. Much of the new tranche -- including the entire portion set aside for the accelerator program -- comes in the form of compute credits for AWS infrastructure, meaning that it can't be transferred to other cloud service providers like Google Cloud and Microsoft Azure.

To sweeten the pot, Amazon is pledging that startups in this year's Generative AI Accelerator cohort will gain access to experts and tech from Nvidia, the program's presenting partner. They will also be invited to join the Nvidia Inception program, which provides companies opportunities to connect with potential investors and additional consulting resources.

The Generative AI Accelerator program has also grown substantially. Last year's cohort, which had 21 startups, received only up to $300,000 in AWS compute credits, amounting to around a combined $6.3 million investment.

"With this new effort, we will help startups launch and scale world-class businesses, providing the building blocks they need to unleash new AI applications that will impact all facets of how the world learns, connects, and does business," Matt Wood, VP of AI products at AWS, said in a statement.

Amazon's growing spending on generative AI tech, which includes efforts like its $100 million AWS Generative AI Innovation Center, free credits for startups using major AI models and its Project Olympus model, comes as the company looks to catch up to tech giant rivals in the blooming -- and increasingly competitive -- generative AI space. While Amazon claims that its various generative AI businesses have reached "multiple billions" in run rate, the company is widely perceived as having missed the boat on generative AI.

AWS originally planned to unveil its own generative AI model akin to OpenAI’s ChatGPT code-named Bedrock -- which eventually became Amazon’s Bedrock model hosting service -- at its annual conference in November 2022, according to The Information. But major bugs forced the organization to postpone the launch. (Amazon PR disputes this.)

Amazon's Alexa division has been beset with challenges as well, thanks to technical setbacks and political infighting, as reported by Fortune's Sharon Goldman this week. Nine months after a splashy press demo of a "next-gen" Alexa, the new Alexa is reportedly far from ready for prime time -- the result of insufficient training data, inadequate access to training hardware and other roadblocks.

Amazon also passed on early opportunities to back two leading AI startups, Cohere and Anthropic. The company later tried to invest in Cohere, but was rejected -- and had to settle for a co-investment (albeit a large one, totaling $4 billion) in Anthropic with chief rival Google.

Besides the recent departure of Howard Wright, AWS' head of startups, who managed startup relationships at the org, a hurdle in Amazon's way is growing scrutiny from regulators over Big Tech's investments in AI startups.

The U.S. Federal Trade Commission recently opened an inquiry on Microsoft's backing of OpenAI, as well as Google and Amazon's investments in Anthropic. European policymakers have signaled they're skeptical of such deals as well.