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It does create a misrepresentation of the valuation as AWS is able to represent the investment as the retail price ($2.7B) while actually they're only parting w

It does create a misrepresentation of the valuation as AWS is able to represent the investment as the retail price ($2.7B) while actually they're only parting with the COGS for the AWS services (<$2.7B).

dmix 3y ago
> It does create a misrepresentation of the valuation as AWS is able to represent the investment as the retail price ($2.7B) Represent it where? In 3rd party journalists who cover it? Or on public market financial statements?
- nicce 3y ago
  Assuming that Amazon got some shares based on the stated value, and if the value is misleading, they got more shares than they should. It includes the profit-value, defined by Amazon itself, that Amazon is getting from running their own servers. Not the real, actual costs.
- chowchowchow 3y ago
  Taxes seem like one possibility for this to be taken advantage of. Invest $X, get $Y kicked back, but calculate losses or gains against the higher $X basis.
kolbe 3y ago
I would be curious to see an actual full accounting of a transaction like this if you know of one.
loeg 3y ago
If the credits displace other paying retail customers, they're worth retail.
toomuchtodo 3y ago
You could potentially file a securities fraud suit if you own Amazon shares (standing) and can find a firm willing to run with it. Not joking, that is the only path to recourse if you take issue with how this is represented. (not legal or securities law advice)
stale2002 3y ago
> It does create a misrepresentation of the valuation So the harm is that some massive VCs with billions of dollars to spend on their investments, might be a bit more confused about what someone else's "real" valuation is? They are qualified investors. I think they can do the work on their own to correct it to the "real" valuation.
- dimask 3y ago
  This is beyond the point, these practices cause economic bubbles and when such bubbles grow too much eventually they pop and a lot of other people pay the price.
  - stale2002 3y ago
    Other firms who think that the price is too high could simply.... not invest in those companies. I am not sure what is confusing about this. If a company is too expensive, the qualified investors who are spending their investment dollars are free to not buy equity in those too expensive companies. They manage billions of dollars! I am sure they can figure out how much a company is actually valued! They aren't going to be "tricked" by some valuation scheme that randos are pointing out in HN comments.
matthewaveryusa 3y ago
Isn't that just really shrewd investing on Amazon's end though? Just because you've identified the win-win doesn't mean it's illegal? In fact it's what investments should look like: companies that invest in other companies for the synergies.
- nescioquid 3y ago
  It seems they could have made the same investment without the misrepresentation - or are you trying to say the misrepresentation itself is shrewd?
- theturtletalks 3y ago
  It would be illegal if Anthropic can't sell those AWS credits on the open market which I'm thinking they can't. You're equating this to a stock swap but that is not the case.
- skhunted 3y ago
  rubuquity’s comment said that it should be illegal; not that it was illegal. In order to close a loop hole or an unintended consequence one must first be aware of its existence. I don’t know enough about the topic but it does seem wrong, at a first glance, for this sort of accounting to be legal.
usrusr 3y ago
Does valuation have any legal implications or is it just a number people can pat themselves on the back for until they can't? Genuine question, I don't know (but you can probably guess what I suspect)
orsenthil 3y ago
Fancy math, but this is still money that is reported, and accounted for in the earnings. So, it is the reality.
tikhonj 3y ago
Sure, it misrepresents the valuation in the same way that deal structuring (liquidation preferences/etc) does in cash investments. The valuation you get by multiplying the cash value of the investment by the equity that was sold is just a marketing number, it isn't inherently meaningful.
WheatMillington 3y ago
The investment value to Anthoropic, which is what matters, is $2.7b.

dmix 3y ago

> It does create a misrepresentation of the valuation as AWS is able to represent the investment as the retail price ($2.7B) Represent it where? In 3rd party journalists who cover it? Or on public market financial statements?

nicce 3y ago
Assuming that Amazon got some shares based on the stated value, and if the value is misleading, they got more shares than they should. It includes the profit-value, defined by Amazon itself, that Amazon is getting from running their own servers. Not the real, actual costs.
chowchowchow 3y ago
Taxes seem like one possibility for this to be taken advantage of. Invest $X, get $Y kicked back, but calculate losses or gains against the higher $X basis.

kolbe 3y ago

I would be curious to see an actual full accounting of a transaction like this if you know of one.

loeg 3y ago

If the credits displace other paying retail customers, they're worth retail.

toomuchtodo 3y ago

You could potentially file a securities fraud suit if you own Amazon shares (standing) and can find a firm willing to run with it. Not joking, that is the only path to recourse if you take issue with how this is represented. (not legal or securities law advice)

stale2002 3y ago

> It does create a misrepresentation of the valuation So the harm is that some massive VCs with billions of dollars to spend on their investments, might be a bit more confused about what someone else's "real" valuation is? They are qualified investors. I think they can do the work on their own to correct it to the "real" valuation.

dimask 3y ago
This is beyond the point, these practices cause economic bubbles and when such bubbles grow too much eventually they pop and a lot of other people pay the price.
- stale2002 3y ago
  Other firms who think that the price is too high could simply.... not invest in those companies. I am not sure what is confusing about this. If a company is too expensive, the qualified investors who are spending their investment dollars are free to not buy equity in those too expensive companies. They manage billions of dollars! I am sure they can figure out how much a company is actually valued! They aren't going to be "tricked" by some valuation scheme that randos are pointing out in HN comments.

matthewaveryusa 3y ago

Isn't that just really shrewd investing on Amazon's end though? Just because you've identified the win-win doesn't mean it's illegal? In fact it's what investments should look like: companies that invest in other companies for the synergies.

nescioquid 3y ago
It seems they could have made the same investment without the misrepresentation - or are you trying to say the misrepresentation itself is shrewd?
theturtletalks 3y ago
It would be illegal if Anthropic can't sell those AWS credits on the open market which I'm thinking they can't. You're equating this to a stock swap but that is not the case.
skhunted 3y ago
rubuquity’s comment said that it should be illegal; not that it was illegal. In order to close a loop hole or an unintended consequence one must first be aware of its existence. I don’t know enough about the topic but it does seem wrong, at a first glance, for this sort of accounting to be legal.

usrusr 3y ago

Does valuation have any legal implications or is it just a number people can pat themselves on the back for until they can't? Genuine question, I don't know (but you can probably guess what I suspect)

orsenthil 3y ago

Fancy math, but this is still money that is reported, and accounted for in the earnings. So, it is the reality.

tikhonj 3y ago

Sure, it misrepresents the valuation in the same way that deal structuring (liquidation preferences/etc) does in cash investments. The valuation you get by multiplying the cash value of the investment by the equity that was sold is just a marketing number, it isn't inherently meaningful.

WheatMillington 3y ago

The investment value to Anthoropic, which is what matters, is $2.7b.