Image source: Character.AI

 Noam Shazeer, the co-founder and CEO of Character.AI, left Google in October 2021 to start an a16z-powered chatbot startup. In his previous work, Shazeer led a research team to build LaMDA (Conversational Applied Language Model), which is used in conversational AI tools.

Character.AI's co-founder, Daniel De Freitas, and a number of other employees of the company will also join Google. Character.AI general counsel, Dominic Perella, will be the startup's interim CEO. The company noted that most of its employees will remain in Character.AI.

Google has also signed a non-exclusive agreement with Character.AI to use its technology.

"I'm very excited to be back at Google and be part of the Google DeepMind team. I'm so proud of what we've done at Character.AI over the past three years. I am confident that the funding from Google's non-exclusive licensing agreement, combined with the incredible Character.AI team, will allow Character.AI to continue to be successful in the future," Shazeer said in a statement to TechCrunch.

Google said Chazel would join the DeepMind research team, but did not specify the specific responsibilities of him and DeFreitas.

"We are particularly pleased to welcome the return of Noam, a distinguished researcher in the field of machine learning, who will join Google's DeepMind research team along with a handful of his colleagues," Google said in a statement. "This agreement will provide Character.AI with more funding to continue to grow and focus on building personalized AI products for users around the world," a Google spokesperson said. "

Character.AI has raised more than $150 million in funding, mostly from A16Z.

Looking at user data, Character.AI is a fairly successful app: just two years old, it has reached nearly 6 million daily active users; User duration and stickiness are also high — users sent more than 2 billion messages within 5 months of launch, and active users spent more than 2 hours a day.

However, the core problem is that users accept the value of the product, but are unwilling to pay for it.

Currently, the company's main revenue comes from membership subscriptions, which allow users to get faster response times, more virtual characters, and more. But currently, Character.AI has fewer than 100,000 subscribers.

"When Noam and Daniel started Character.AI, we needed a full-stack approach to our personalized superintelligence goals. We had to train the model upfront and post-train it to provide an experience that sets Character.AI apart and build a product platform that can reach users around the world," Character AI announced in its blog. "

"However, in the last two years, things have changed; There are now more pre-trained models. In light of these changes, we see an advantage in terms of greater use of third-party LLMs and our own models. This allows us to devote more resources to post-training and create new product experiences for our growing user base. "

Different regulators, such as the Federal Trade Commission (FTC) and the Department of Justice (DoJ) in the United States and the European Union, are likely to conduct rigorous scrutiny of these reverse takeovers. Last month, the United Kingdom's Competition and Markets Authority (CMA) issued an announcement saying it was investigating Microsoft's hiring of key personnel from Inflection AI to see if the tech giant was trying to evade regulation. The United States Federal Trade Commission launched a similar investigation in June, investigating Microsoft's $650 million deal.  

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