Amazon Taps Anthropic’s Claude for Alexa AI Overhaul

Anthropic’s Claude AI powers Amazon’s new Alexa, surpassing in-house AI as the company gears up to launch a premium version before the holiday season.

Reuters, San Francisco: According to five people who spoke to Reuters, Anthropic’s Claude artificial intelligence models would fuel Amazon’s redesigned Alexa more than the company’s own AI when it launches in October, just in time for the American Christmas season.

According to a June Reuters report, Amazon intends to charge $5 to $10 monthly for its new “Remarkable” version of Alexa, which would employ strong generative AI to respond to complicated queries. The “Classic” voice assistant will remain free of charge.

Yet early iterations of the new Alexa, developed internally using proprietary software, were reportedly word-challenged and occasionally took six or seven seconds to recognize a command and respond, according to one of the people.

According to the people, Amazon used Claude, an AI chatbot created by startup Anthropic, because it outperformed the company’s in-house AI models.

Reuters interviewed five people with firsthand knowledge of the Alexa approach for this piece. They all declined to be identified since they could not discuss private topics.

Alexa, accessed mainly through Amazon televisions and Echo devices, can set timers, play music, operate as a central point for smart home management, and answer one-off questions.

However, Amazon’s efforts to get customers to shop using Alexa to increase revenue have mostly failed, and the division still needs to gain money.

Consequently, senior management has emphasized that 2024 is a crucial year for Alexa to show that it can finally produce significant sales, and the redesigned paid version is regarded as a means to both do so and stay up with competitors.

In response to specific inquiries from Reuters for this report, a company spokesperson stated, “Amazon uses many different technologies to power Alexa.”

“When it comes to machine learning models, we start with those built by Amazon, but we have used and will continue to use, a variety of different models – including (Amazon AI model) Titan and future Amazon models, as well as those from partners – to build the best experience for customers,” said the spokesperson.

Amazon owns a minority in Anthropic; the company declined to comment on this issue.

AI Collaborations

Historically, Amazon has avoided depending on technology it has yet to create internally to maintain complete control over the user experience, data collecting, and customer interactions.

However, others are looking for a partner to enhance its AI offerings. For instance, Microsoft and Apple have partnered with OpenAI to deploy ChatGPT to power some of their products.

According to the people, a sneak peek of the new service will be provided during Amazon’s yearly devices and services event, usually held in September. As it is known internally, the Remarkable Alexa is anticipated to launch in October.

The date of Amazon’s showcase event, which will mark the first significant public appearance of Panos Panay, the company’s new devices boss appointed last year to succeed longtime executive David Limp, is yet to be discovered.

The widespread release of ChatGPT in late 2022—which provides nearly instantaneous full-sentence responses to complex inquiries—sparked a flurry of corporate maneuvering and investment to improve AI software for various uses, including voice, video, and image services.

In contrast, Reuters has been informed by Amazon employees that the company’s ten-year-old Alexa needed to be updated.

While Amazon prides itself on “working backward from the customer” when developing new services, some interviewees claimed that since last year, the Alexa division has focused on keeping up with rivals in the AI race.

Employees at Amazon have also voiced doubts about whether consumers who already pay $139 for their Prime memberships would be prepared to spend an additional $60 to $120 a year for a currently free service.

Upgrades for Alexa

According to those who know the Alexa approach, the commercial version of Alexa would continue discussions with a user by building on previous queries and responses.

According to the sources, the updated Alexa is intended to let customers ask for shopping suggestions, such as what to pack for a trip, and to compile news articles. Additionally, it is designed to handle more complex requests—like placing a restaurant order or creating an email—all with a single prompt.

According to Amazon, they anticipate that the new Alexa will also be a supercharged hub for home automation, remembering user preferences to set things like alarms for the morning or reminding the television to record favorite shows even when the user forgets to do so.

The insiders stated that if the company’s plan fails, Alexa might be postponed or changed if the technology fails to achieve specific internal criteria. However, they did not provide any other information.

In June, Justin Post, an analyst at Bank of America, calculated that there were approximately 100 million active Alexa users, with 10% potentially using the premium version. Even at the low end of the monthly price range, that would generate yearly sales of at least $600 million.

Although it claims to have sold 500 million Alexa-enabled devices, Amazon withholds the number of active users.

When Amazon announced in September last year that it was investing $4 billion in Anthropic, it promised its customers would have early access to its technology. Reuters could not ascertain whether Amazon would need to pay Anthropic more for using Claude in Alexa.

Amazon declined to comment on the specifics of its agreements with the firm. Additionally, Google Alphabet has made at least $2 billion in Anthropic.

The UK’s antitrust regulator has formally investigated the store and Google about the Anthropic arrangement and its effects on competition. In August, it declared that it would launch an initial investigation and gave itself 40 working days to choose whether to advance it to a higher level of inspection.

The updated Alexa will be released in October, as previously reported by The Washington Post.