Google’s Got A Game Changer: Rivaling ChatGPT With A New Plan and A Startup Partner!
(Reuters) – Alphabet’s Google is in talks to invest hundreds of millions of dollars in Character.AI as the fast-growing artificial intelligence chatbot startup seeks capital to train models and keep up with user demand, two sources briefed on the matter told Reuters.
The investment, which could be structured as convertible bonds, according to a third source, deepens Character.AI’s already existing partnership with Google, where it uses Google’s cloud services and Tensor Processing Units (TPUs) to train models.
Google and Character AI did not respond to requests for comment.
Founded by ex-Googlers Noam Shazeer and Daniel De Freitas, Character.AI allows people to chat with virtual versions of celebrities like Billie Eilish or anime characters, while also creating their own chatbots and AI assistants. It’s free to use, but offers a subscription model that charges $9.99 per month for users who want to skip the virtual line to access the chatbot.
Character.AI’s chatbots, with different roles and selectable tones, have attracted users between the ages of 18 and 24, who account for about 60 percent of its website traffic, according to Likeweb data. The demographic helps the company position itself as a provider of more fun personal AI companions compared to other chatbots like OpenAI’s ChatGPT and Google’s Bard AI chatbots.
The company previously said that its website has received 100 million monthly visits in the first six months since its launch.
Character.AI is also in talks to raise equity financing from venture capitalists, which could value the company at more than $5 billion, sources said. In March, it raised $150 million in a $1 billion funding round led by Andreessen Horowitz.
Negotiations with Google are continuing and the terms of the deal could change, said the sources, who spoke on condition of anonymity because the discussions are private.
Google has invested in AI startups, including $2 billion in model maker Anthropic in the form of convertible bonds, on top of its previous equity investment. Anthropic uses Google’s cloud services and its latest TPU version.
This is part of a recent trend of big tech cloud providers striking deals with AI companies to entice them to use specific cloud services or hardware in a computer-intensive race to build models and serve consumers, including Microsoft’s investments in OpenAI and Google, and Amazon’s investment in Anthropic.
US Federal Trade Commission Chairwoman Lina Khan said at an event in San Francisco last week that the agency is investigating cloud service providers’ investments in artificial intelligence startups to investigate anti-competitive behavior.
