Cohere, Aleph Alpha sign merger for reported $20 billion

Cohere and Aleph Alpha had already announced their plan in April, with Schwarz Group GmbH — the German retailer behind Aleph Alpha's venture funding — planning to provide €500 million, or about $573 million, in financing. Last week, The Global and Mail reported that a consortium backed by the Canadian government could invest another $3 billion.

The two companies bring different pieces to the table. Toronto-based Cohere sells open-source large language models called Command, specialized algorithms for translation and search, and a productivity service called North; its revenue reached $240 million last year, according to CNBC. Germany-based Aleph Alpha develops small language models for enterprises and government agencies, builds custom evaluation benchmarks, and pursues research such as a library that can double inference performance of LLMs and an approach to preventing AI hallucinations in retrieval-augmented generation systems.

The combined company's priority will reportedly be a broader partnership with Schwarz Group, which has a cloud unit called STACKIT and announced plans to spend €11 billion on a new data center hosting up to 100,000 graphics processing units. Whether that data center capacity and the retailer's financing translate into a competitive position for the merged AI vendor will depend on regulatory approval and on how quickly the two product lines — Cohere's large models and Aleph Alpha's small models — come together for enterprise and government buyers.