Exclusive: Here's How Much Anthropic Spends on AWS

company Cursor, its largest customer for API services. I can exclusively reveal today how much Anthropics spent on AWS for the years twenty twenty four and from the beginning of twenty twenty five through the end of September twenty twenty five, and from what I can see, their compute spend may

vastly exceed what has previously been reported. Furthermore, I can confirm that through the end of September twenty twenty five, Anthropic is spent around one hundred percent of their revenue in twenty twenty five on Amazon Web Services, spending two point sixty six billion dollars on compute on an estimated two point five five billion dollars in revenue. Go to

the newsletter. I source the whole goddamn thing, and if I'm honest, this piece is the culmination of several months of articles about how Anthropics business tactics have made be

turned the screws on their biggest customer. I can exclusively reveal today, as well as many other numbers in the newsletter, the curs of Amazon Web services bills doubled from six point two million dollars in May twenty twenty five to twelve point six million dollars in June twenty twenty five, and have stayed inflated since Anthropic increased the costs with the launch of priority servers, tiers and aggressive rent seeking measure. I need to be clear I cannot one hundred percent

guarantee that's what did it. I'm going to hedge my bets very hard on that, but it certainly Bloody Wealth seems that way. It's my guard instinct. I'm not going to say it declaratively, but I'm going to show you why I believe this, And I admit I struggled with how to turn this into an episode because the newsletter, which is on my free feed, is a series of numbers and analyzes that if I just read them aloud, would sound extremely dull and at times be quite hard

to follow. It's not something that naturally plays well for radio. So instead of giving you the audible version, I'm going to give you the cliff notes and speak to a degree of vindication I feel on reading these costs. So let's start with a number. One point two two five billion dollars. That's how much Anthropic spent on Amazon Web

Services in the third quarter of twenty twenty five. They spent eight hundred and twenty nine point seven million in Q two twenty twenty five, and six hundred and ten million dollars in Q one twenty twenty five. Oh and one other number, they spent one point three five billion dollars on AWS and twenty twenty four. So yeah, just in another way, talking of their twenty twenty five numbers, anthropics spend on AWS doubled over the course of three quarters.

Now a little backstory about Anthropic that's necessary to understand this fully. Anthropic was originally invested in by both Google and Amazon. According to The New York Times, Google owns around fourteen percent of the company. An analyst, yes Tomate, Amazon owned somewhere between fifteen and eighteen percent, and both have, in not so many words, said that they're the main

or primary compute part for Aanthropic. It's unclear how much Anthropic spends on Google Cloud, but semi analysis believes they're a big client, and that's about as much detail as I can get from anywhere I've really looked. In any case, Anthropic is spending effectively every dollar they make on Amazon Web Services, and Amazon has appears to be booking this as revenue, though I can't directly confirm that, though I

do know these numbers are cash, they're after credits. Though in the recent months, Anthropic has lowered the amount of revenue they're spending on it to eighty six point two percent in Q three twenty twenty five, which is an improvement from Q two to twenty twenty five, where they spent one hundred and six percent of their revenue and Q one, where they spent one hundred and seventy five percent of what they made on Amazon Web Services. It's

quite horrifying when you say it out loud. Now, if you're thinking that, because these numbers are quite close, that this might suggest that Anthropics costs are improving, think again. Anthropics. Amazon Web services costs of a habit of massively spiking. For example, their AWS bill led from three hundred and eighty three point seven million dollars in August twenty twenty five to five hundred and eighteen point nine million dollars in September twenty twenty five. That's one hundred and thirty

five million goddamn dollars. And my hunch is it's because they have a massive problem where clawed code users are each costing them thousands of dollars despite only paying one hundred or two hundred dollars a month. There's also the nasty matter of Google Cloud. Anthropics Amazon Web Services bill is two point sixty six billion dollars from January through the end of September, as I said, and that is pretty close to two point five to five billion dollars

in revenue. But if Anthropics spend on Google Cloud was only twenty five percent of what they spent on AWS, its compute cost would jumped to three point three three billion dollars through the end of September, way more than it brings in. If it's half of what they spent on Amazon Web Services, this becomes a three point nine to nine billion dollar compute bill, and if they spend the same amount, the bill becomes five point three billion dollars,

and again that's just through the end of September. Another note, cursors spend on Amazon Web services is comparatively small, but includes some spend on Anthropics models because Amazon is allowed to sell them. And I believe that the reason that they do this, because they do directly pay Anthropic like they actually send money directly to them, is because Amazon offers significant discounts in some cases for running models through

their service. I think it's their bedrock service, and my source confirmed that this was the case, though I could not get granular data on what exactly CURSES spend was on Amazon, like I can't say, oh, they use this model or that model. Now, Cursor spends most of their compute money directly with Anthropic, as well as every other

model developer whose models they use. AWS is a small piece of the puzzle, and while small, it's spending data provides evidence of how much this shit actually costs, though I also concede that some of the money CURSES spends with AWS likely goes to the non AI part of

the business, like file hosting and other tech infrastructure. Nevertheless, the timing of the massive jumps in CURSES AWS bill from six point two million dollars in May to twelve point six million dollars in June directly correlate with the massive changes made to their product, increasing the costs on any users that wanted to use Cursor in the way they had in the past by making them face the actual costs of serving models on a per million token basis.

I've written about this a lot, By the way, it's hard to describe it in detail because it's going to take forever. But around mid June, Cursor had to change everything because mysteriously they had to stop spending so much money with their customers. Their customers would burning a hole in their pocket, and I think we can kind of see why. Curses costs have also never come down, spiking to a higher fifteen point five million dollars in June, dropping to a still high nine point six million dollars

in August. I need to spike again to twelve point nine million dollars in September, though I cannot declaratively state

that this is exactly what happened. Curses costs doubled immediately following the addition of anthropic service tiers in late May twenty twenty five, which require an upfront commitment of token spend and token throughput, and when Curser announced the launch of their two hundred dollars a month ultraplan amidst massive product changes, they cited how it was and I quote made possible by multi year partnerships from open Ai, Anthropic, Google and Xai, and that their support was instrumental in

offering this volume of computer the predictable price. Now, really, I'm being as fair as I can. Another factor might be that the new Claude four models was significantly more expensive. It's entirely possible that all of these things are true. I just want to make sure I cover my basis because I do not know for sure. But the timing,

the timing man and another thing, you know what. Anthropic also launched a week before service Tears a competing product, a Cursor called claud Code one that they could run with as little restraint as they'd like to drain as many monthly customers away from Cursor, who is also their largest customer, buying Anthropic models through their API. Real fucking mystery, right, If it quacks like a dark where's a T shirt that says dark? And Claude tells you you're absolutely right,

that's a duck. When you upload a picture of it, it's probably a fucking duck. But I obviously can't say for sure. I need to be explicit here with what happened, though.

Anthropics supplied access to their models to a company Cursor, and then released a product claud Code that did exactly the same thing as that company Cursor, turning it both into a customer and a competitor in the process, creating a massive conflict of interest, as not only did Anthropic have an incentive for that customer or competitor to fail, though they also needed their compute revenue, which is kind

of a bugger. Anthropic also had the means to make this failure happen in the most painful and expensive way possible by worsening the terms in which that competitor required the compute it needed to function. Could be a coincidence, I guess. And when I say compute, I mean tokens. Just I'm reading a script. Okay, where us going to eam Anyway, I'm not going to turn this into a massive, sprawling episode about this company. I wanted to give you the raw information so you can go and read the

detailed analysis. I did. It's free, by the way, don't worry. But now I want to talk about how all this made me feel, because that's what makes this show unique. I think is the appropriate way of coming out this. I'm going to be honest, I find what it looks like, and I'm hedging my beds again. Anthropic did to Cursor

truly disgusting. Cursor hit five hundred million dollars in annualized revenue in the same month that they then saw their cost double, dramatically reducing the value of their subscription product at the apex of their success. Yes, Cursor is an unsustainable AI company I know, and like all of these companies, has no part of the profitability. Anthropic should have always charged sustainable rates, even if it meant that it wasn't possible to build a big company based on their models. Sadly,

we don't live in that universe. And while you could make the case that startups like Uber didn't at first charge sustainable rates, I'd argue that the reason why its initial rates weren't successful was because of the steep upfront cost of customer acquisition, which is the problem that could be solved through the lifetime of the customer and Uber had the means to gradually ratchet up the costs of rides or mores. Italy reduced the cut that they pay

to drivers in a way that wouldn't be immediately paying for. Furthermore, Uber never had a fuel problem. What Anthropic has as a fuel problem, they have a compute problem for the amount that they're paying to run their goddamn services. Cursor is also Anthropic's largest customer, and the timing of priority tiers to coincide at the moment when they were growing

fastest is a suspicious and potentially disgraceful move. While you could describe it as a necessary step in the direction of sustainability, that plausible excuse is undercut by the overall

timing of the move. One cannot ignore how close the launch of these tiers were to the launch of anthropics clawed Code, a product that lacks curses, flashy front end, but performs similar functions, all subsidized by anthropics massive hordes of venture capital, and its chummy relationships with hyperscalers like

Amazon and Google. The thing is, even with these moves, Anthropics still spent a dollar and four cents on Amazon Web services for every dollar they made through the end of September twenty twenty five, and that's for just twenty twenty five. By the way, their costs increase nearly with their revenue. And while they've improved, when they spent a remarkable two hundred and twenty seven percent of their revenue on AWS in January, they still spent eighty eight point

nine percent of it on a western September. Now, if you're worried hearing how close these numbers before, like I said, means there's somehow approaching profitability. Good lord, No, I'm repeating myself. I realized, But I really need you to come away with this with reality in your brain. These digital mister beans very likely spend comparable sums on Google Cloud unlikely another billion or two one salaries data And I don't know that one point five billion dollar settlement with all

the authors that they just agreed to. This company absolutely fucking sucks. I don't care if you like Claude Sonnet or claud Opus. I don't give a fuck. Claude Opus and Claudes on It are not worth burning billions of dollars a year in cloud costs, fueling an environmentally destructive plagiarism charge pseudo company that would roll over and die within months if it didn't constantly get fed billions of dollars a year. What are you gonna tell me they're

gonna turn this ship around. They're gonna make some sort of autonomous AI coder. You know that's bullshit. Every goddamn one of you boosters knows that total bullshit. I'm sure son at four point five is somewhat better than Sonnet four, but what does that actually mean? Anthropic raised twenty billion dollars this year? Do we give them more next year?

I've heard reports that they're actually targeting twenty billion dollars in anialized revenue, so one point six to seven billion dollars a month in revenue by the end of next year. It's an absolute fucking joke. But the only thing funnier than that joke is that it will likely cost them twenty five billion dollars to make that fictional money. And

where preytell is that coming from? And why? Why? What is so remarkable about this company that gives them a free paster burn two point sixty six billion dollars in AWS in fucking nine months. I'm not talking about your cynical oh, Amazon is booking at is revenue crony capitalisms? Here an'tswer it. I'm not, I'm not. I'm talking about the scientific or technological reasoning for keeping Anthropic alive. And yes,

I feel exactly the same way about Open AI. What possible achievement does Anthropic have that warrants this needless, endless, sprawling financial destruction. Why are we rewarding a company with bad business practices for making a product that loses more money the more money it makes. I'll even try and see this through the eyes of an AI booster. Damn, all I'm seeing is blue and yellow anyway, And even from here, the only reason to keep Anthropic alive is

because you see these companies as sports teams. You see Dario Amiday as the equivalent of Dan Campbell or Greg Popovich. You root for them and their causes because you think that if they win, you as a fan will be rewarded. You don't think too hard about what it is that Claude Sonnet or Claude Opus do, and you find enough ways that this is somewhat kind of useful to you, and you use those reasons to justify the proliferation of

a wasteful and destructive technology. What exactly happens here? Anthropics AWS bills are not really going down. They've normalized in an eighty eight to ninety five percent range and they're clearly going to stay there. And if your argument is they'll go down, your argument is quite literally no, eh.

Go read semi analysis for seventeen hours and come up with some demented GPU based argument about inference smax scores, pretend like you give a shit, come up with a real argument against mine, because I am working hard, are at this than you are, And if you believe otherwise, you should ask yourself why the guy who said Sam Altman's no it loads refused cash dump in a premium newsletter got this scoop and you did not. But that

actually leads me to a key question. How long do we hand Anthropic and by extension, open AI billions of dollars? And for the first time in your goddamn life, it's time to ask, what if I'm right? What if these companies are incapable of becoming profitable? What if there really is no massive demand for generative AI? Do you really think Anthropic will make one point six billion dollars a month? Sometime in twenty twenty six, do you really think that?

And even for Amazon, it's kind of shit wow to do a couple billion on one hundred and five billion dollars of capex. I might have even said this later in the script, but just thinking about it makes me

feel a little crazy. And look, I get there's a middle ground here where people say that there's some sort of use case that sort of works for AI, where you hit it hard enough to write good enough prompts or whatever that you like it for search, that your brainstorm with it, they helped you pick out a hat that you used it to solve some sort of problem. Once, I just want to ask you how much of those anecdotes really worth to you? How impressed with these things

are you? Would you pay double, triple, quadruple? Would you pay on a meted basis where those little flights of fancy cost you a few cents, then ten cents, then a dollar, because that's how much it costs to provide these services, and at some point you're going to be made to pay for it one way or another. Advertising

won't be the answer. By the way, the literal only company to try advertising in large language models is an AI search engine company called Perplexity, and they just paused accepting new advertisers too, and I quote ad week rethink how ads fit into its AI search experience. They made twenty thousand dollars in twenty twenty four in advertising revenue. Are we supposed to be impressed that Perplexity made enough revenue to buy a second hand Toyota Corolla. There are

people making more money than that's slinging fucking Herbalife. And this is literally the exact company that should have succeeded based on any kind of ads will fix everything argument. And they couldn't even buy courtside tickets at the NBA playoffs. The costs are increasing linearly with revenue, and I've fucking proved it. I am open to any compelling arguments that can explain how this ever changes. And my god, if you say trainium, I will absolutely lose my shit. Chips

aren't fixing this. By the way, if your answer is the anthropic will make some sort of theoretical ultrapowerful large language model or invent agi, you are a goddamn mark. You are being conned. Look join me. I'm serious. There's no harm in being wrong I've been wrong tons of times in my life. Being wrong and admitting you're wrong is an act of bravery. Shit, actually kind of get it.

This stuff feels if you let it, like it's doing something for you, even though interacting with it is actually draining you because you're constantly having to find ways to make it do what you want it to do, to the point that when it actually does something for the first time, it almost feels magical. You feel very powerful, despite the fact that you have been put to work to make automation work. That's not how automation is meant

to work. And sure, there are software engineers out there who have, like any good software engineer, found a way to take the useful parts of llms and use them to, to quote Carl Brown of the Internet at bugs, make the easy things easier. Then there are the ones that are spending more time than they were building software, prompting l elms and rewriting claude dot md files and thinking that because things sort of worked off they hit enter

that they're privy to a great becoming. And there are the victims, of course, of vibe coding startups companies that sell the outright lie that somebody who cannot read or write software can write secure, effective and functional software. Look, I'm serious, join me. If you're an AI booster, I don't care. Everybody is welcome. In reality, I don't care who you are. I don't care if I've called you a booster and given you a verbal swirly one hundred times.

Now is the time to accept that this software is too expensive, too destructive, and too wasteful to continue backing it. I'm not even saying you have to say fuck AI or shun chat GPT like you're an armish teenager that looked at porno. But it's time to be loud and direct that these products are not worth the egregious and perpetual annihilation of billions of dollars every fucking year. I don't even know if this means you have to stop using them. I don't want you to, but I don't like.

What are we gonna do. These things are not gonna go away because you stopped using Claude. They're gonna go away because you stop talking about them. They're gonna go away because they cost too much in their pay pigs stop paying them. What I am advocating for is for everybody to openly discuss that the amount of money it costs to run these companies is that odds with what they have built, are building and will build in the future.

Nothing they are building is moving towards superintelligence or AGI. No combination of Amazon Tranium or Google TPUs is going to usher in the birth of the machine guard. The products they make are, at best, and in inconsistent moments, kind of cool, but one hundred times more often mediocre, unreliable, and outright ridiculous, even if you really get a lot out of these models. Do you think that these companies should be allowed to burn billions of dollars every year?

How much do you think they should be allowed to burn? And how much is too much for you? It's time to start having this conversation and having it publicly, especially as Clammy Sam Mortman Bloviate's about building two hundred and fifty gigawatts of data centers in seven goddamn years at the cost of one third of America's entire fucking economic output in twenty twenty four. Anyway, this has been a big day for me, so I'm going to leave it there.

It's a huge scoop. I'm grateful that I get to do this every day, grateful for you listening, and grateful for your reading. I hope you've enjoyed this episode and thank you as eva for supporting my work. Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matasowski. You can check out more of his music and audio projects at Matasowski dot com, M A T T O. S O w

Ski dot com. You can email me at easy at Better Offline dot com or visit Better Offline dot com to find more podcast links and of course, my newsletter. I also really recommend you go to chat dot Where's Youreed dot at to visit the discord, and go to our slash Better Offline to check out our reddit. Thank you so much for listening. Better Offline is a production

of cool Zone Media. For more from cool Zone Media, visit our website cool Zonemedia dot com, or check us out on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.