Google is in discussions to invest a significant amount of money in Character.AI, a fast-growing startup that specializes in artificial intelligence chatbots. The investment, which may be in the form of convertible notes, will strengthen the existing partnership between Google and Character.AI. The startup currently utilizes Google’s cloud services and Tensor Processing Units (TPUs) for training its models. Both Google and Character.AI have declined to comment on the matter.
Character.AI was founded by former Google employees Noam Shazeer and Daniel De Freitas. The startup allows users to interact with virtual versions of celebrities and anime characters, as well as create their own chatbots and AI assistants. While the service is free to use, there is a subscription option available for $9.99 per month, which allows users to bypass the virtual line and gain immediate access to a chatbot.
Character.AI’s chatbots have gained popularity among users aged 18 to 24, who account for approximately 60% of the website’s traffic. The startup aims to position itself as a provider of fun and personalized AI companions, distinguishing itself from competitors such as OpenAI’s ChatGPT and Google’s Bard. Since its launch, Character.AI’s website has attracted 100 million monthly visits.
In addition to the potential investment from Google, Character.AI is also in talks with venture capital investors to raise equity funding. These discussions could value the startup at over $5 billion. In a previous funding round led by Andreessen Horowitz, Character.AI raised $150 million at a valuation of $1 billion.
The ongoing discussions between Google and Character.AI are subject to change, according to anonymous sources familiar with the matter. Google has been actively investing in AI startups, including a $2 billion investment in model maker Anthropic. This investment was made in the form of convertible notes and supplemented Google’s existing equity investment in the company. Anthropic also utilizes Google’s cloud services and the latest version of TPUs.
The trend of big tech cloud service providers investing in AI startups is becoming more prevalent. These investments are aimed at encouraging startups to use specific cloud services or hardware for building models and serving consumers. Microsoft has invested in OpenAI, while Google and Amazon have made bets on Anthropic. The U.S. Federal Trade Commission is currently examining these investments to assess any potential anti-competitive behaviors.
In conclusion, Google’s potential investment in Character.AI reflects the growing trend of big tech companies investing in AI startups. This investment would deepen the existing partnership between Google and Character.AI, allowing the startup to meet user demand and further develop its AI chatbot capabilities.
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