Google's Bringing Character AI's Brains Back Home

Character AI (CAI), one of the hottest consumer AI products with 100M+ monthly visits, is losing its brainy founders and core LLM talent to Google. It's a homecoming for Noam Shazeer, co-author of the original Transformers paper at Google, and his team.

What's going on here?

Google is licensing CAI's models and rehiring its co-founders, who left Google to start CAI in the first place.

What does this mean?

Users spend hours talking to CAI’s chatbots. I wouldn’t blame you for thinking CAI is more of a threat to ChatGPT than Gemini — and it looks like Google agrees to some extent.

CAI's co-founders (Noam Shazeer and Daniel DeFreitas) are rejoining Google. They aren't alone; most of the team building CAI’s LLM is flocking with them. The announcement adds that Google is licensing (non-exclusive) CAI’s current LLM technology. For context, CAI has built its own AI models since 2021 with little publicity of its tech.

For the most part, this looks like acquiring top-tier LLM talent. I don’t think Google wants CAI’s models (especially after releasing their own experimental model that's topping the charts). What could this license be for?

CAI itself isn't going anywhere. It'll keep running but with open-source models instead of its homegrown tech. It makes sense, with Meta’s Llama models being almost as good as the closed-source models, why run money down the drain to train the same LLMs? Instead, CAI will focus on making their roleplay chatbots stickier.

Investors are getting a decent deal, about 2.5x what they paid in 2023 when valuing CAI at $1B. Not exactly money magic, but hey, it's something. Employee stocks will also vest till 2026 at the same rate.

Why should I care?

This deal is part of a trend where big tech is gobbling up AI startups faster than you can say "chatbot." Microsoft scooped Inflection AI, Amazon gobbled up Adept AI, and now Google has managed this masterstroke with Character AI.

It's changing the AI landscape and raising eyebrows about competition. Plus, if you're into AI or tech investing, it's a heads-up that even buzzy startups might end up back in the arms of tech giants. Oh, and if you're a CAI fan, your favorite chatbot might be in for some changes.