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Google is thinking about putting a lot of money, maybe hundreds of millions of dollars, into Character.AI. Character.AI is a fast-growing startup that makes AI chatbots. They need the money to teach their AI better and keep up with all the people who want to use it. Two people who know about this told Reuters.
This new investment might be in the form of something called "convertible notes," says another person who knows about it. This will make the partnership between Google and Character.AI even stronger. Right now, Character.AI already uses Google's cloud services and something called Tensor Processing Units (TPUs) to teach its AI.
Both Google and Character.AI didn't say anything about this when asked.
Noam Shazeer and Daniel De Freitas, who used to work at Google, started Character.AI. With this platform, you can talk to virtual versions of famous people like Billie Eilish or anime characters. You can even make your own chatbots and AI helpers. It's free, but if you pay $9.99 a month, you get to jump ahead in line to use a chatbot.
Character.AI's chatbots offer users aged 18 to 24 a range of roles and tones to choose from, making up around 60% of the website traffic, as per Similarweb data. This demographic helps the company stand out as a provider of more enjoyable personal AI companions compared to competitors like OpenAI's ChatGPT and Google's Bard.
The company had mentioned earlier that its website received 100 million monthly visits within the first six months since its launch.
In addition to this, Character.AI is currently in discussions to secure equity funding from venture capital investors, potentially valuing the company at over $5 billion, according to sources. In March, it successfully raised $150 million in a funding round led by Andreessen Horowitz, reaching a valuation of $1 billion.
The discussions with Google are still happening, and the details of the deal might change, according to insiders who want to keep this private.
Google has been putting money into AI startups, like giving $2 billion to a company called Anthropic in the form of something called "convertible notes." They already invested in Anthropic before. Anthropic uses Google's cloud services and the newest version of TPUs to make models.
This is part of a recent trend where big tech companies that provide cloud services are making deals with AI companies. They want these companies to use their specific cloud services or hardware to build computer-intensive models for users. For example, Microsoft invested in OpenAI, and Google and Amazon are supporting Anthropic.
The chair of the U.S. Federal Trade Commission, Lina Khan, mentioned at an event in San Francisco last week that the agency is checking out investments by cloud providers in AI startups to see if there's any unfair competition going on.
