AI Bubble About to Burst? Character.AI CEO Returns to Google with 30 Employees
Character.AI's CEO Naom Shazeer and President Daniel De Freitas, along with 30 members of the research team, have left the company to return to Google. This is the third "CEO departure" incident in just five months.
The company's General Counsel, Dominic Perella, will serve as interim CEO. The 30 departing employees were primarily responsible for model training and voice AI, and they will join Google to work on the Gemini AI project.
Reports suggest that this deal values CharacterAI at $2.5 billion, nearly half of the $5 billion valuation discussed with investors last year.
Character.AI officially explained that due to changes in the industry landscape and the increased availability of pre-trained models, they decided to utilize more third-party LLMs in combination with their own models. This allows the company to invest more resources in subsequent training and create new product experiences for users.
Google has agreed to pay Character.AI licensing fees for its models and has hired the CEO and several researchers at high salaries. Shazeer expressed excitement about returning to Google and joining the DeepMind team.
Character.AI will shift towards using open-source models like Meta's Llama 3.1 to support its products, rather than its internal models. The company assures it will continue to build personalized AI products for global users.
This practice of "acquiring founders" has caught the attention of antitrust regulators. The Federal Trade Commission is investigating a similar deal between Microsoft and Inflection.
Industry insiders point out that training conversational AI models is extremely costly, but paying users are far from enough to break even. Character.AI had previously negotiated with companies like Meta and xAI.
Besides cost issues, content moderation for AI chatbots also faces challenges. Character.AI says it will implement stricter content controls, but this may lead to user loss.
Some analysts believe the AI bubble could burst within weeks. These deals allow investors to quickly recoup funds, but far below their initial expected returns.