Character.AI has signed a licensing agreement with Google, allowing the tech giant to use the startup’s large language model (LLM) technology in its products.
The latest move provides Google with a non-exclusive licence to enhance its services with artificial intelligence (AI) capabilities.
Under the new agreement, the Alphabet subsidiary will provide additional funding to Character.AI, though the financial details remain undisclosed. This funding is aimed at supporting Character.AI to expand and develop customised AI products for its global users.
As part of the agreement, Character.AI’s co-founders Noam Shazeer and Daniel De Freitas will return to Google, where they previously worked. Shazeer will move to Google DeepMind’s research team.
A Google spokesperson stated in an email to Reuters: “We’re particularly thrilled to welcome back Noam, along with a small number of his colleagues.”
Dominic Perella, who previously served as general counsel at Character.AI, has been appointed interim CEO. Perella joined the leadership team in mid-2023 after working at Snap.
Established in 2022, Character.AI raised $193m in venture capital from investors including Andreessen Horowitz.
The company has developed technologies aimed at enhancing user interfaces and functionalities. It plans to incorporate third-party LLM technologies alongside its proprietary models.
Character.AI stated: “As we enter this next phase of growth, we will continue to invest in our post-training capabilities, with the flexibility to use our own or externally available LLMs. We are excited for the future of Character.AI, and are committed to serving our users through innovative new products.”
The licensing transaction with Google was facilitated by the law firm Sullivan & Cromwell.
This deal between Google and Character.AI is similar to recent industry agreements, like Microsoft’s acquisition of technology and talent from AI startup Inflection for $650m in March this year, and Amazon’s hiring of founders and staff from Adept in June 2024.
These moves have come under regulatory scrutiny in the US and Europe, underscoring concerns about how major tech companies are shaping the competitive landscape in AI by acquiring technology and talent.
Inflection and Adept had secured $1.3bn and $415m in venture capital, respectively.
On its part, Google has increased efforts in AI with significant investments and the development of its infrastructure, particularly through Google DeepMind.
The company merged its Google Brain team with DeepMind to streamline the development of AI models that are versatile and scalable.
In terms of AI infrastructure, Google has expanded its Vertex AI platform to include the Gemini 1.5 Pro model. This model is notable for its ability to process and understand lengthy contextual data, which enables more complex AI applications across various sectors.
Google has also committed $3bn to expanding its data centres in Virginia and Indiana, essential for the substantial data processing requirements of AI operations.
Concurrently, Google has introduced the AI Opportunity Fund and an AI Essentials Course to facilitate AI skill development among a wider demographic.
Last week, the UK Competition and Markets Authority (CMA) said that it is considering whether Google’s parent Alphabet’s previously announced partnership with Anthropic created a relevant merger situation under the merger provisions of the Enterprise Act 2002.
Based in the US, Anthropic is an AI safety and research company, which is considered to be a rival of ChatGPT developer OpenAI.
Last month, Google’s parent company reported a net income of $23.62bn for the second quarter of 2024, a 28.6% increase compared to $18.36bn for the same quarter of the previous year.
