Britain's competition watchdog has launched a formal investigation into Alphabet's $2.3 billion investment in artificial intelligence startup Anthropic, marking the latest regulatory scrutiny of big tech companies' involvement in the AI sector.

The Competition and Markets Authority (CMA) announced on Thursday it had "sufficient information" to begin an initial probe into whether the partnership could harm competition in UK markets. The investigation will examine Alphabet's reported $300 million investment from early 2023, followed by an additional $2 billion commitment later that year.

The probe comes amid growing concern about deals between major technology companies and AI startups. Anthropic, founded in 2021 by former OpenAI executives Dario and Daniela Amodei, develops AI models including the chatbot Claude.

"We are an independent company and none of our strategic partnerships or investor relationships diminish the independence of our corporate governance or our freedom to partner with others," an Anthropic spokesperson said.

Alphabet defended the partnership, with a spokesperson stating: "Google is committed to building the most open and innovative AI ecosystem in the world. Anthropic is free to use multiple cloud providers and does, we don't demand exclusive tech rights."

The CMA has set 19 December as the deadline for its Phase 1 decision, when it will determine whether to escalate the investigation. This follows the regulator's recent approval of other significant AI investments, including Amazon's $4 billion deal with Anthropic and Microsoft's partnerships with Inflection and Mistral.

The investigation will examine whether the arrangement constitutes a "quasi-merger," where large technology companies effectively gain control of emerging startups through strategic investments and hiring practices. Both companies currently compete in providing large language models to businesses and enterprise customers.

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