Ex-Google engineers who founded Character.AI rejoin company with new AI partnership

Founders of one of the hottest artificial intelligence startups Character.AI are rejoining Google along with other team members.

Noam Shazeer and Daniel De Freitas, in addition to certain members of Character.AI’s research team, are joining Google’s AI unit DeepMind, the companies said Friday. 

Character.AI uses large language models to allow users to create chatbots and interact with those created by other users. The startup reached a $1 billion valuation as the AI boom began last year. Character.AI did not generate revenue then but said it was considering offering a subscription service in the future.

The two founders left Google in 2021 after the search giant reportedly rebuffed their attempts to try and get Google to push a chatbot forward. They went on to start Character.AI that same year.

Freitas criticized the company’s slow-moving pace, telling Axios last March, “There are some overlaps, but we’re confident Google will never do anything fun,” regarding the Bard, which is now Gemini chatbot.

Character.AI will provide Google with a nonexclusive license for its current large language model, or LLM, technology, the company’s blog post states. “This agreement will provide increased funding for Character.AI to continue growing and to focus on building personalized AI products for users around the world,” it states.

“Over the past two years, however, the landscape has shifted — many more pre-trained models are now available,” the blog post continues. “Given these changes, we see an advantage in making greater use of third-party LLMs alongside our own. This allows us to devote even more resources to post-training and creating new product experiences for our growing user base.”

Alphabet, facing criticism of getting beat to the AI chatbot craze by OpenAI’s ChatGPT, has enacted changes to its organization to move more quickly to market. Late last year, Google was reportedly in talks to invest hundreds of millions of dollars in Character.AI.

“I am super excited to return to Google and work as part of the Google DeepMind team,” Shazeer said in a statement on Friday. “I am so proud of everything we built at Character.AI over the last 3 years. I am confident that the funds from the non-exclusive Google licensing agreement together with the incredible Character.AI team positions Character.AI for continued success in the future.”

A Google spokesperson said in a statement to CNBC, “We’re particularly thrilled to welcome back Noam, a preeminent researcher in machine learning, who is joining Google DeepMind’s research team, along with a small number of his colleagues.”

The move also comes amid a competitive talent and AI landscape, leading companies to form partnerships against a tough regulatory landscape that has placed scrutiny on mergers and acquisitions. Britain’s competition watchdog said earlier this week it is looking into Google’s partnership with AI startup Anthropic, for example.

In March, Microsoft hired Mustafa Suleyman, a co-founder of AI startup DeepMind that Google acquired in 2014, and much of its staff to lead AI initiatives. Suleyman became an executive vice president and CEO of Microsoft AI, reporting to CEO Satya Nadella. Last month, U.K. regulators opened a merger probe on Microsoft’s hiring of the staff.