Character.ai quits AI model race after $4b Google deal
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The news: Character.ai has abandoned developing its own AI models following its unusual USD2.7bn ($3.91 billion) deal with Google, instead focusing on its popular chatbot platform.
Dominic Perella, the San Francisco-based start-up’s interim CEO, told The Financial Times the company had largely abandoned the race to build large language models against better-funded competitors like Google, Microsoft-backed OpenAI and Amazon, the paper reported.
Instead, the firm will concentrate on its consumer-facing chatbot platform, which has garnered significant traction among young users aged 13-25.
The context: Character.ai's decision comes as the costs of training cutting-edge AI models become prohibitively expensive for smaller players.
It also follows the deal with Google that saw the tech giant acquire a one-time licence to Character.ai’s technology and poach 20% of its staff, including its co-founders.
Perella said the deal also provided the start-up with sufficient funds to operate for the next 18 months.
With 20 million active monthly users, mostly aged 13-25, and enough funding, he added Character.ai plans to explore further licencing deals and raise venture capital in the future.
What they said: “It got insanely expensive to train frontier models . . . which is extremely difficult to finance on even a very large start-up budget,” Perella told the FT in his first interview since taking the role in August.
“Our consumer products got incredible traction, and you had a bit of a dichotomy inside the company of folks who wanted to focus on training the most cutting-edge possible models versus folks who came from a consumer background seeing this product take off."
“Over the past few weeks, we coalesced around this mission of creating the next big platform and using AI to power it and using our secret sauce to power it,” Perella added.
The source: Financial Times
