Amazon has become the latest tech giant to enter the AI arms race by pouring billions into the start-up behind a popular chatbot.

The online shopping firm said it will invest up to £3.3bn into San Franciscobased Anthropic, the developer of AIpowered chatbot Claude, a competitor to OpenAI’s ChatGPT.

Amazon will initially invest £1bn for a minority stake in the artificial intelligence (AI) safety and research company, with an option later to increase the cash injection to the full sum.

Amazon chief executive Andy Jassy said: ‘We have tremendous respect for Anthropic’s team and foundation models, and believe we can help improve many customer experiences, short and long-term, through our deeper collaboration.’

The price tag is likely to boost Anthropic’s valuation significantly following a fundraising earlier this year which valued the entire company at almost £4.1bn.

Claire Holubowskyj, senior research analyst at media research service Enders Analysis, said: ‘Amazon working with other AI companies isn’t new, but this is a big lean in.

‘Amazon approaches AI at all levels, from the chips to the software, so this new investment is simply putting their money where their mouth is.’

Under the terms of the deal, Anthropic will use Amazon’s cloud computing system Amazon Web Services (AWS) and AI computer chips to create its programs.

It is also a marked shift for Anthropic away from rival tech giant Google, which last year pumped £246m into the business.

Amazon’s investment comes amid a fierce battle between some of the world’s biggest tech companies as they scramble to lead the booming market for AI.

Microsoft has already forged an alliance with OpenAI while rivals such as Inflection AI and Canadian outfit Cohere have raised hundreds of millions of pounds in funding from other large tech groups.

Amazon is hoping to capitalise on the growing interest in generative AI, technology that is capable of generating text and images in a manner similar to humans.

Amazon is also pitching its Trainium and Inferentia computer chips as viable alternatives to those developed by market leader Nvidia, which has seen its share price soar this year as the AI boom sparked a surge in demand for its products.

The move follows the creation of AWS’s Bedrock service, which allows customers to build AI applications on the company’s cloud infrastructure and already boasts a range of products including Claude. But Amazon’s investment is not an exclusive arrangement, unlike Microsoft’s deal with OpenAI, which has seen the latter adopt the tech giant’s Azure platform as its only cloud provider.

The terms are also thought to leave Amazon with a much smaller stake than the 49pc of OpenAI that Microsoft controls.

Anthropic will be hoping it can outshine its Silicon Valley rival, where its founders used to work before splitting from the business in 2021 amid a disagree- ment over the direction of the company. Microsoft fired the starting gun on Big Tech’s AI scramble when earlier this year it signed its partnership with OpenAI and poured in billions to advance the technology.

A key area of interest for the tech giant is using AI to enhance its Bing search engine as it looks for ways to loosen Google’s iron grip on the market.

Facebook-owner Meta is also jumping on the AI bandwagon, with the firm having released its own chatbot models, Llama and Llama 2, in a bid to compete with OpenAI and Anthropic.

Aside from the tech giants, AI has also attracted the interest of the pharmaceutical sector as a way of speeding up the development of new medicines.

Drug giants such as GSK have already begun using AI to make medical treatments more personalised for individual patients, which in turn can increase the effectiveness of drugs. But the rapid rise of AI – and its ability to create realistic images, videos and human-like text – have caused regulators and campaigners against the spread of disinformation to raise the alarm.

Last week, the Competition and Markets Authority (CMA) warned that AI could leave consumers more vulnerable to email scams and fake reviews when shopping online.

The regulator has published seven principles to regulate AI models, which look at building more accountability and transparency for businesses that want to use the technology.

Pharma giant AstraZeneca has signed a huge deal with a UK start-up to create treatments for diabetes and other autoimmune diseases.

The FTSE 100 firm will team up with London-based Quell Therapeutics to collaborate on research and the licensing of any new medicines.

The aim is to develop treatments for Type 1 diabetes and inflammatory bowel disease through the use of genetically engineered ‘regulatory T-cells’ – ‘Tregs’ for short.

Tregs help to stop the immune system from overreacting in areas of the body affected by a disease. Quell’s technology is an extension of therapies which have proven successful in treating cancer.

Astra says it will pay Quell £68m upfront to help fund the research.

The start-up will also be eligible for over £1.6billion in development milestone payments and royalties if any drugs are approved for sale.

Mene Pangalos, executive vice-president of biopharmaceuticals research at Astra, said the deal would allow it to ‘explore the untapped potential with Treg cell therapies’.

Quell boss Iain McGill added: ‘This collaboration builds on our pioneering work to develop exquisitely engineered, multi-modular Treg cell therapies for immune disorders.’

Quell was founded in 2019 by six immunologists from King’s College London, University College London and Hannover Medical School.

Prior to the deal with Astra, it raised about £175m from a consortium of investors and is valued at about £239m.

A major backer is London-listed firm Syncona, a trust that invests in companies focused on cell and gene therapies. The firm owns just over a third of Quell.

‘Astra’s expertise and capability will be instrumental in driving these important programmes forward,’ said Martin Murphy, who is chairman of both Syncona and Quell.

News of the tie-up came as Astra announced that the US Food and Drug Administration (FDA) had voted to recommend its drug nirsevimab as a treatment to prevent respiratory syncytial virus (RSV) in infants.

RSV is a common infection that causes cold-like symptoms. Most people recover within two weeks but the illness can become serious in infants and older adults and may lead to lung infections and pneumonia.

If nirsevimab is approved, it will be the first medicine designed specifically to protect infants from RSV.

‘We look forward to continuing to work with the FDA to complete their expedited review, and we hope to see nirsevimab available as soon as possible given the significant burden of RSV in infants,’ said Iskra Reic, Astra’s executive vice-president of vaccines and immune therapies.