Character.ai Pivots Strategy After $2.7B Google Deal, Exits LLM Race

Character.ai, a San Francisco-based AI startup, is shifting its focus away from developing large language models following a $2.7 billion deal with Google. The deal resulted in Google acquiring 20% of Character.ai’s staff and a one-off license to the startup’s models.

Key points of the strategic pivot include:

  • Prioritizing enhancement of consumer products, particularly popular chatbots
  • Stepping back from large language model development due to high costs
  • Retaining ownership of technology and continuing AI research

Dominic Perella, Character.ai’s interim CEO, explained the decision: “It got insanely expensive to train frontier models… which is extremely difficult to finance on even a very large start-up budget.”

The deal with Google included:

  • Rehiring of co-founders Noam Shazeer and Daniel De Freitas
  • A non-exclusive agreement allowing Google to leverage Character.ai’s technology

This shift mirrors similar moves by other AI startups, such as Germany’s Aleph Alpha, which has also abandoned large language model development due to prohibitive costs.

The departure of Character.ai’s founders to Google marks a significant change in the AI landscape. Noam Shazeer, an AI pioneer known for his work on Google’s Language Model for Dialogue Applications (LaMDA), had previously left Google in October 2021 to launch Character.ai.

Despite the changes, Perella remains optimistic about the company’s future, stating, “We still own all of our technology, have almost all of our people and we are continuing to grow.”

For more details on the AI industry’s latest developments, visit Benzinga’s report on Character.ai’s strategic shift.

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