In detail
- Distillation allows smaller models to learn from larger models' outputs; Amazon has rights to do this with Anthropic.
- Starting next year, Amazon pays for Anthropic models based on tokens processed rather than compute hours—could sharply increase costs.
- Amazon exploring alternatives like OpenAI and its own Nova models; has invested up to $25 billion more in Anthropic and up to $50 billion in OpenAI this year.
- Anthropic emphasizes lower prices relative to model performance; Amazon spokesperson denies cost increase from expanded partnership.
Why it matters
This shows even large cloud providers struggling with AI cost structures and resorting to workarounds. For German companies, it signals that token-based pricing models could become expensive—distillation and local models will grow more attractive.
For you Watch how distillation and smaller open-source models emerge as cost levers—could matter for your budget.