Why Google's unusual Character.AI deal is likely to raise eyebrows with regulators
The deal, where Google acquires talent and licensing rights but not equity, reflects a growing trend between Big Tech giants and aspiring AI startups.
Riding the high of a successful capital raise last year, Character.AI co-founder Daniel De Freitas said his startup was protected from competition from Google — not because his ex-employer couldn’t technologically replicate it, but rather because it “will never do anything fun".
A lot can change in a year. Rumours had circulated that Google was working on a competitor to Character.AI, which creates and hosts AI-powered chatbots with different personalities that its users can engage with. These rumours were confirmed over the weekend when Google hired De Freitas and his co-founder Noam Shazeer.
De Freitas, Shazeer and a few other colleagues will join Google in yet-to-be-revealed roles, while the tech titan will licence Character.AI’s large language model technology in an agreement both sides stressed was non-exclusive. Equity in Character.AI was not part of the deal.
Crucially, Character.AI will continue to operate — sans the original founder and some core talent.
