Google Secures Licensing Agreement with Character AI and Hires Key Executives for DeepMind Initiatives

Character AI Partners with Google: A New Chapter for AI Avatars

Character AI, a leading AI avatar company, is forging a closer relationship with Google. In a recent blog post, the startup announced it will license its large language model (LLM) technology to Google. This partnership aims to secure additional funding for Character AI, enabling the company to innovate and enhance its personalized AI products for users worldwide.

As part of this collaboration, Character AI's co-founders, Noam Shazeer and Daniel De Freitas, along with select members of its research team, will join Google. Most employees will remain with Character AI, while Dominic Perella, the company's general counsel, will step in as interim CEO.

Future Direction of Character AI

“As we embark on this new phase of growth, we will invest in our post-training capabilities, utilizing both our own and externally available LLMs. We’re excited about the future of Character AI and remain committed to delivering innovative products to our users,” the company stated in its announcement.

What is Character AI?

Founded in 2022, Character AI enables users to create AI avatars of themselves or fictional characters. The company achieved a valuation of $1 billion in March 2023, following a successful $150 million funding round led by Andreessen Horowitz. Initially, Character AI developed its own models through a comprehensive approach of pre-training, training, and deployment.

However, in recognizing that "the landscape has shifted," Character AI plans to leverage Google’s pre-trained LLMs, allowing it to concentrate on post-training models and further product development.

Interestingly, recent reports indicated that Meta is discontinuing its celebrity AI chatbots, which were seen as competitors to Character AI, due to low user engagement.

Google confirmed to the media that Shazeer, a former software engineer at Google, will be joining the DeepMind team. “I am thrilled to return to Google and collaborate with the DeepMind team. I’m proud of what we’ve accomplished at Character AI over the past three years,” said Shazeer in a recent email. “I believe the resources from the non-exclusive Google licensing agreement, combined with the exceptional Character AI team, will position us for ongoing success.”

The AI Landscape: What's Next?

Neither Google nor Character AI provided specific details about the nature of their deal, including whether it resembles an acquisition. In the tech industry, “acquihiring” has been a common practice, where companies bring on startups’ executive teams while leaving the startup structure intact. Sources indicate that this arrangement is neither an acquisition nor an acqui-hire.

Moreover, this isn’t Character AI’s first involvement in acquisition discussions. The Information reported that Elon Musk's AI startup, xAI, expressed interest in acquiring Character AI, although Musk later denied these claims on his platform, X (formerly Twitter).

This partnership with Google signals an exciting shift for Character AI, opening doors to new possibilities in the realm of AI avatars and user personalization.