Google Hires Character.AI Founders, Signs AI Licensing Deal

Startup Character.AI announced on Friday that it has entered into a non-exclusive licensing agreement with Alphabet's Google. This deal grants Google access to Character.AI's large language model technology. Echoing recent agreements made by Microsoft and Amazon, this move sees Character.AI co-founders Noam Shazeer and Daniel De Freitas returning to Google, where they were previously employed.

Regulatory Scrutiny and Industry Impact

These types of deals are increasingly coming under regulatory scrutiny in both the U.S. and Europe, as tech giants invest billions in enhancing their AI capabilities and recruit top talent from startups. Character.AI will receive additional funding as part of the agreement with Google, although the specific amount has not been disclosed. Dominic Perella, Character.AI's general counsel, will step in as interim CEO effective immediately.

Google's Enthusiastic Welcome

A Google spokesperson expressed excitement about the return of Noam Shazeer, a leading researcher in machine learning, who will join Google DeepMind's research team along with several colleagues. This move follows Microsoft's $650 million acquisition of Inflection's co-founders and staff in March, and Amazon's hiring of Adept's co-founders and employees in June.

Strategic Shifts and Future Directions

Character.AI's co-founders Noam Shazeer and Daniel De Freitas are rejoining Google, marking a significant reunion. Google gains a non-exclusive license to Character.AI's language model technology, with about 30 of Character.AI's 130 employees, primarily those focused on model training and voice AI, joining Google's Gemini AI initiatives.

Character.AI plans to transition to open-source models like Meta's Llama 3.1 for its products, moving away from proprietary models. Previously, Character.AI raised $193 million in venture capital from investors, including Andreessen Horowitz, and was reportedly in discussions to secure hundreds of millions from Google.

Conclusion: The Intensifying AI Talent Race

This deal underscores the escalating competition to secure top AI talent, mirroring Microsoft's recent deal with Inflection and Amazon's agreement with Adept. As AI becomes increasingly vital to the future of tech companies, these talent acquisitions could significantly reshape the industry landscape, while also raising potential antitrust concerns.