Character.AI Inc., a well-funded startup with a chatbot service for consumers, today announced that its founders will join Google LLC.
Noam Shazeer and Daniel De Freitas are returning to the search giant about two years after leaving their engineering roles to launch Character.AI. The chatbot maker, in turn, will continue operating under new leadership.
In 2017, Shazeer and seven other Google researchers published a seminal paper entitled “Attention is All You Need.” The paper introduced the concept of Transformers, artificial intelligence models that can consider a large amount of contextual information when analyzing user input. The Transformer architecture underpins practically all the most advanced language models on the market including OpenAI’s GPT-4o.
Daniel De Freitas, Character.AI’s other founder, worked as a senior staff software engineer at Google before launching the startup. He was the president of Character.AI prior to today’s announcement while Shazeer was its chief executive.
The two engineers launched Character.AI in late 2022 and went on to raise more than $150 million from investors. The startup built a freemium service that allows consumers to create chatbots optimized for specific tasks. A user could, for example, create a chatbot that focuses solely on explaining how to solve math problems.
Last March, Character.AI disclosed that the web version of its service was nearing 100 million monthly visits. Two months later, the company launched a mobile app that drew 1.7 million users within one week. It uses internally developed large language models to power its service and makes money by selling a paid version that offers faster chatbot response times.
Last September, sources told Bloomberg that the company was in talks to raise hundreds of millions of dollars from investors. It reportedly hoped to close the round at a valuation exceeding $5 billion, or more than five times what it was worth following its most recent raise.
Google is hiring not only Shazeer and De Freitas but also several members of the chatbot maker’s research team. The search giant told TechCrunch that Shazeer is joining its Google DeepMind AI research group. In a blog post, Character.AI stated that most of its team will remain.
In parallel with the hires, Google has inked a nonexclusive agreement with the chatbot maker to license its LLM technology. The Information reported that Google is buying out Character.AI’s investors for $88 per share. That’s about 2.5 times what the shares were worth at the time of the company’s most recent funding round.
Character.AI will use the proceeds from the deal to enhance its product portfolio. Going forward, the company plans to use not only internally-developed LLMs but also third-party models to power its chatbot tools. Character.AI will be led by interim CEO Dominic Perella, who was previously general counsel, until the company names a permanent successor to Shazeer.
The news that Character.AI’s founders are joining Google comes less than six months after Microsoft Corp. inked a similar agreement with Inflection AI Inc., another well-funded AI developer. Microsoft hired two of the company’s three founders and inked a nonexclusive deal to license its LLMs. That agreement is now reportedly the focus of antitrust probes in the U.S. and the U.K., while the European Commission is currently weighing whether to launch an investigation of its own.