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Google (GOOGL) has acquired a chatbot that lets you converse with AI versions of celebrities for a reported $2.7 billion, but that huge sum also includes the company’s top employees, including some former Googlers.
Investors should expect a divided Congress, strategist says
Noam Shazier left the company in 2021 after the company refused to release a chatbot he developed. He will now lead the company’s AI initiative, Gemini.
A Google insider told The Wall Street Journal that while Google officially paid about $3 billion for Character.AI, Shazia’s reunion with his executives was the most significant contributing factor in determining the final price.
As of August, Character.AI had raised approximately $150 million and was last valued at approximately $1 billion.
“I’m proud of everything we’ve built at Character.AI over the past three years,” Shazeer said in a statement to TechCrunch. “With the funding from our non-exclusive Google licensing agreement and the incredible Character.AI team, I’m confident that Character.AI will be well placed for continued success.”
Founded in 2022, the chatbot lets users converse with AI versions of celebrities and fictional characters, such as Elon Musk, with users able to choose from a variety of roles and voices, and even receive actionable advice.
The platform attracts mostly 18-24 year olds, who account for 56% of the website’s traffic, according to data intelligence platform SimilarWeb (SMWB). Early versions included language tutors and coding instructors, but have since moved to a subscription-based model for faster response times and more pre-trained models.
But the platform quickly became a place for romantic role-playing, with many of the 18 million characters created by Character.AI being a mix of “absurd, risqué or overtly sexual,” according to Time magazine.
Despite chatbots’ potential pitfalls, Google executives plan to spend $12 billion per quarter this year to keep up with advances in AI.
Much of that spending has gone to startups founded by ex-Googlers like Shazia, a process known as “reverse acquisition hire,” which allows larger companies to license a smaller company’s technology and hire some of its staff without going through an outright acquisition.
In March, Microsoft (MSFT) paid $650 million in cash for OpenAI rival Inflection, gaining access to the startup’s model and most of its employees. The deal has since come under investigation by the Federal Trade Commission.
Tech expert Scott Galloway said on “Pivot,” a podcast he co-hosts with tech journalist Kara Swisher, in June that Microsoft had taken away the company’s “heart and lungs.” Swisher added that “there will be litigation in the AI space… and there should be.”
