Google, Microsoft invest in AI startups as battle for dominance heats up

In an esca­lat­ing bat­tle for mar­ket share in the AI sec­tor, Google and Microsoft have made new strate­gic start­up invest­ments as they vie for dominance.

Google invests in Runway

The Infor­ma­tion report­ed June 1 that Google had invest­ed in Run­way, an AI start­up acclaimed for its text-to-video tool, as part of a $100 mil­lion fund­ing round.

This invest­ment has boost­ed Runway’s val­u­a­tion to $1.5 bil­lion and is antic­i­pat­ed to insti­gate a major tran­si­tion from Ama­zon Web Ser­vices (AWS) to Google’s cloud servers.

Ear­li­er this year, Google also poured $400 mil­lion into Anthrop­ic, a rival of Ope­nAI, and signed agree­ments with Mid­jour­ney and Char­ac­ter AI, fur­ther solid­i­fy­ing its invest­ment strategy.

Google’s robust back­ing of these AI star­tups, includ­ing Runway’s text-to-video tool, Midjourney’s text-to-image tech­nol­o­gy, and Char­ac­ter AI’s chat­bot capa­bil­i­ties, under­lines the tech giant’s inten­tion to sup­port and expand bur­geon­ing AI technology.

Such strate­gic invest­ments close­ly mir­ror the tech industry’s broad­er focus on AI, fol­low­ing on the heels of Microsoft’s invest­ment in OpenAI.

Microsoft invests in CoreWeave

Microsoft has also been active­ly invest­ing in the AI sec­tor, with CNBC report­ing a poten­tial­ly mul­ti-bil­lion dol­lar deal with CoreWeave, a start­up backed by Nvidia.

CoreWeave pro­vides sim­pli­fied access to Nvidia’s graph­ics pro­cess­ing units (GPUs), wide­ly regard­ed as among the best on the mar­ket for run­ning AI mod­els. This agree­ment will bol­ster Microsoft’s efforts to meet the expo­nen­tial demand for AI-pow­ered ser­vices, simul­ta­ne­ous­ly posi­tion­ing itself in com­pe­ti­tion with Google.

This CoreWeave invest­ment comes on the heels of the start­up rais­ing $200 mil­lion in fund­ing and attain­ing a $2 bil­lion valuation.

CoreWeave was found­ed in 2017 and has grown rapid­ly, with its rev­enue mul­ti­ply­ing from 2022 to 2023. With the surge in gen­er­a­tive AI demand, Microsoft’s acqui­si­tion of addi­tion­al access to Nvidia’s GPUs through CoreWeave demon­strates a strate­gic response to the esca­lat­ing AI rush.

Both Google’s and Microsoft’s strate­gies, while unique in their approach, share a com­mon goal of har­ness­ing AI’s trans­for­ma­tive poten­tial, bol­stered by the market’s fer­vent enthu­si­asm for the technology.