Google’s Potential Investment in Character.AI
Alphabet’s Google is currently in discussions about a significant investment in Character.AI, a swiftly growing AI chatbot startup. This investment, potentially reaching hundreds of millions of dollars and possibly structured as convertible notes, aims to bolster the startup’s capacity to train models and meet the soaring user demand. Sources familiar with the matter revealed that this move will deepen the existing collaboration between Character.AI and Google, leveraging Google’s cloud services and Tensor Processing Units (TPUs) for model training.
Character.AI, spearheaded by former Google employees Noam Shazeer and Daniel De Freitas, enables users to engage with virtual versions of celebrities like Billie Eilish or anime characters. Additionally, it empowers users to craft their own chatbots and AI assistants. While the platform is free to use, it offers a subscription model priced at $9.99 per month for users seeking expedited access to chatbots.
Target Demographics and Impressive Milestones
This AI venture has captured the attention of users aged 18 to 24, constituting around 60% of its website traffic, according to Similarweb data. This demographic focus positions Character.AI as a unique provider of engaging personal AI companions, distinguishing itself from AI chatbots like OpenAI’s ChatGPT and Google’s Bard. Notably, the company claimed 100 million monthly visits within the initial six months of its launch, marking a significant milestone. Moreover, Character.AI is currently in discussions for equity funding from venture capitalists, potentially valuing the company at over $5 billion. In March, it secured $150 million in funding led by Andreessen Horowitz, establishing a valuation of $1 billion.
The ongoing discussions between Google and Character.AI are subject to potential alterations in the deal’s terms, as disclosed by sources requesting anonymity due to the confidentiality of the negotiations.
Google’s Strategic Investment in AI Startups
Google’s strategic investment in AI startups, such as Anthropic with a $2 billion investment in convertible notes, underlines the tech giant’s commitment. Anthropic, a model maker, utilizes Google’s cloud services and latest TPUs, reflecting a broader trend where major tech cloud service providers forge partnerships with AI companies. This trend aims to leverage specific cloud infrastructure or hardware for intensive model development and consumer service. Similar initiatives include Microsoft’s investments in OpenAI and the backing from Google and Amazon for Anthropic.
The recent statement by U.S. Federal Trade Commission chair Lina Khan highlights heightened scrutiny into cloud provider investments in AI startups. This scrutiny seeks to scrutinize potential anti-competitive behaviors within this evolving landscape.
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