Amazon to splurge $230M on free cloud credits for generative AI startups

Amazon Web Services Inc. said today it’s giving away $230 million in AWS cloud credits to generative artificial intelligence startups, as part of its bid to remain at the forefront of a cloud computing industry that’s now laser-focused on winning over AI companies.

The company will give free credits to early-stage generative AI startups, enabling them to access its compute power, a range of AI models and specialist infrastructure and services, in order to encourage them to build their businesses on its cloud platform.

AWS already gives away around $1 billion in cloud credits to a range of startups every year, but this initiative is focused specifically on nascent generative AI companies looking to get their businesses off the ground.

Matt Wood, vice president of artificial intelligence products at AWS, said the initiative is designed to help startups launch and scale their businesses. Amazon is “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,” he said.

With free access to AWS cloud resources, startups will be able to iterate more rapidly and pivot when necessary, Wood added. “Ultimately, when they hit on that home run, they’ll be able to double down and get to the scale with security, responsibility and consistency,” he said.

A chunk of that $230 million commitment will go towards funding the second cohort of Amazon’s Generative AI Accelerator program, which is an incubator that aims to identify the most promising startups in the industry. Through the program, startups get up to $1 million worth of AWS credits, plus access to Amazon’s AI experts, mentorships and introductions to investors.

The 10-week program is focused on generative AI startups building products and services in industries such as financial services, life sciences, healthcare, media, entertainment and sustainability. Startups admitted to the program will be able to use the credits to build, train, test, fine-tune and launch their generative AI models, and they’ll also get the chance to join Nvidia Corp.’s Inception program, which provides access to further resources and expertise.

Giving away free cloud credits is a well known strategy employed by all of the major cloud infrastructure providers, including Google Cloud and Microsoft Azure. They use the credits as a lure, so that startups build their businesses on their respective platforms. Should that business take off, their need for cloud resources will accelerate, and ultimately they will become important customers, generating long-term revenue.

Earlier this year, Amazon said it was expanding its cloud credits program to provide free access to large language models from companies such as Meta Platforms Inc., Cohere Inc., Mistral AI and Anthropic PBC. They can be accessed via the Amazon Bedrock platform, which also provides various developer tools for building generative AI applications.

For generative AI companies, the prospect of free cloud credits is enticing, as AI training often requires enormous computational resources that can quickly deplete any cash reserves they manage to raise. Besides accessing various LLMs, AWS cloud credits also cover compute, storage, database technologies and provide access to AI-focused chips such as Nvidia’s graphics processing units and Amazon’s Trainium and Inferentia2 processors.

AI is proving to be a real money spinner for cloud computing providers. In its most recent earnings report, AWS saw its revenue climb 17% to $9.42 billion, with much of that increase driven by generative AI.

Although generative AI is an extremely promising opportunity for cloud companies, AWS and its peers are facing scrutiny from antitrust regulators over concerns that they’re stifling competition in the industry through their control of AI resources.

Earlier this year, the U.S. Federal Trade Commission opened an inquiry that’s focused on how major technology companies are investing in AI startups. No charges have been announced yet, but the FTC has reportedly asked for further information from cloud providers.

Watchdogs in Europe and the U.K. are also investigating the links between AI startups and U.S. cloud infrastructure providers.

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