Google has reached an agreement with AI chatbot startup Character.AI to obtain a non-exclusive license for the company's current language model technology.
As part of the deal, Character.AI co-founders Noam Shazeer and Daniel De Freitas, along with some members of the research team, will join Google.
The majority of Character.AI's team will remain with the company and continue to focus on product development and supporting its user base, the company states. Dominic Perella, previously General Counsel at Character.AI and a long-time executive at Snap Inc., will take on the role of interim CEO effective immediately.
Until now, Character.AI has taken a "full-stack" approach, which included pre-training its own language models, adapting them for the platform, and building a global user base. However, given the increasing availability of pre-trained models, the company now sees an advantage in using more third-party language models.
This shift allows Character.AI to focus more on customizing models and developing new product experiences for users, according to a blog post. The company emphasizes that it will continue to invest in its own model customization capabilities while having the flexibility to use both its own and externally available language models.
Google reduces competition and strengthens its AI development
The departure of the founders and the licensing of the technology to Google suggests that the search giant is looking to acquire Character.AI's capabilities without a full acquisition, which would likely raise antitrust concerns. Character.AI was one of the few successful AI platforms to establish itself alongside ChatGPT, with a particularly younger user base drawn to its personalized chatbots.
This deal represents a change of course for Character.AI, shifting its focus to the application layer and user experience rather than building a full-fledged AI company.
Google's approach is reminiscent of Microsoft's stealth acquisition of much of UK AI startup Inflection.ai, leaving it as an AI services company, and the appointment of its CEO, Deepmind co-founder Mustafa Suleyman, as Microsoft's own CEO of AI, which is being scrutinized by the UK's Competition and Markets Authority.
But it's also unclear whether Character.AI would have been able to stay in the market long term without this deal, given the high costs of AI research, development, and operations, as well as overwhelming competition. The company's intention to rely more on third-party language models suggests a desire to withdraw from the AI model rat race.
The Information reported that Elon Musk's xAI was also considering acquiring Character.AI, which Musk denies on X. However, his denials aren't worth much, as he previously claimed that xAI wasn't seeking funding when the Financial Times leaked news of a $6 billion funding round, only for the round to become official four months later.
