Key Character.AI employees including CEO Noam Shazeer will join Google as part of a new deal

Founded in 2022 by former Google employees Noam Shazeer and Daniel De Freitas, Character.AI enables the creation of personalized and voice-enabled AI assistants, or Characters, that can support users with a wide range of tasks. Recently, Character.AI shared more about the next stage in its journey, including the shift from exclusively using proprietary models to an approach that combines proprietary and third-party LLMs, and the recent agreement that Character.AI and Google are entering into.

With this agreement, Character.AI will provide Google with a non-exclusive license of its technologies in exchange for increased funding which enables Character.AI to continue the development of personalized AI products for its customers. Additionally, research team members from Character AI, including Noam Shazeer and Daniel De Freitas, will join (or more precisely, re-join) Google as part of the agreement. The company has noted that most of its team will stay in-house and that General Counsel Dominic Perella will serve as interim CEO for the time being, as Character.AI continues to build its products to serve its growing user base. With this restructuring of its vision, Character.AI will focus its resources on post-training capabilities.

Although neither party has confirmed more details on the deal, the arrangement between Google and Character.AI strongly resembles the increasingly popular "acquihire", where a bigger company incorporates large parts or hires key talent of a smaller one without actually taking over the company, allegedly to avoid the regulatory concerns that often arise with acquisitions. However, market regulators have caught on to these practices, and it is not far-fetched that the deal between Google and Character.AI could face the same level of scrutiny as the recent arrangement between Microsoft and Inflection AI.