Google to invest millions in Character.AI: Report
What's the story
Google's parent company, Alphabet, is in talks to invest a substantial sum in AI chatbot start-up Character.AI, two insiders familiar with the development have told Reuters.
The potential investment, which might take the form of convertible notes as per another source, would solidify the existing relationship between Character.AI and Google, helping the former to train models and meet user demand.
Character.AI already relies on Google's cloud services and Tensor Processing Units (TPUs) for model training.
Brief
Character.AI enables users to engage with virtual replicas of celebrities
Character.AI, established by ex-Google employees Noam Shazeer and Daniel De Freitas and launched last year, enables users to interact with virtual replicas of famous personalities and celebrities like Elon Musk, Albert Einstein, and Billie Eilish.
Users can also interact with fictional/anime characters and develop their own chatbots and AI assistants.
While it is free to use, a subscription model that costs $9.99/month is available for users who prefer to bypass the virtual line and gain immediate access to a chatbot.
Scenario
AI chatbot start-up also exploring equity funding opportunities
Character.AI's chatbots have reportedly become increasingly popular among 18- to 24-year-olds, who account for roughly 60% of its website traffic, according to Similarweb data.
The company has previously announced reaching 100 million monthly visits within half a year of its launch.
Alongside negotiations with Google, Character.AI is also exploring equity funding opportunities with venture capital investors, potentially valuing the firm at over $5 billion.
Insights
Big tech companies investing in AI firms
Google's interest in AI start-ups aligns with a recent pattern of major tech cloud service providers forging deals with AI firms.
These agreements promote the use of specific cloud or hardware services in the race to create AI models and cater to consumers.
Some prominent examples include Microsoft's investments in OpenAI and both Google and Amazon's stakes on Anthropic.