Amazon engineers are working to reduce costs by distilling Anthropic models into smaller, cheaper versions before a new token-based pricing system kicks in. This move is part of a renegotiation of their partnership, which could lead to higher costs for Amazon. The company is exploring alternatives, including OpenAI and its own Nova models. Amazon has invested heavily in both Anthropic and OpenAI, with up to $25 billion and $50 billion invested, respectively. Why it matters: this development highlights the ongoing efforts of tech giants to navigate the complex and rapidly evolving AI landscape while managing costs and investments.