The core team of the star AI unicorn Character.AI has been acquired by Google. The two founders, Noam Shazeer and Daniel De Freitas, announced their return to Google, along with some members of the research team.
Although officials stated that most of Character.AI's team will remain to continue product development, Google has signed a non-exclusive licensing agreement with the company. Reports suggest that Google will acquire Character.AI investors' stock at a $2.5 billion valuation, higher than the previous $1 billion valuation but lower than the earlier $5 billion valuation.
This "acqui-hire" model has become common in the AI field recently. Microsoft obtained technology licensing from Inflection through a similar approach, and Amazon has made similar moves with Adept.
Character.AI has recently faced funding difficulties. Despite having over 20 million users, its monetization ability is weak. The projected revenue for 2024 is only $16.7 million. The high cost of building their own models is also a major challenge.
For Google, this collaboration provides access to talent and model licensing. Character.AI may transform into a "wrapper startup," developing products based on third-party models.
Character.AI's interim CEO role is filled by General Counsel Dominic Perella. The company has also open-sourced its core technology, Prompt Poet.
This reflects a new round of reshuffling among AI startups, with many companies seeking acquisition without substantial revenue. Industry insiders believe that AI startups are starting to collapse without actual income.