Google is contemplating a substantial investment in Character.AI, as per two informed sources. The purpose behind this move is to support the development of models and cater to the rising consumer demand within the fast-growing artificial intelligence bot startup industry.
The potential investment, likely in the range of hundreds of millions, could involve convertible notes and is expected to enhance the existing partnership between Character.AI and Google. Character.AI, co-founded by Noam Shazeer and Daniel De Freitas, comprises former Google personnel. The platform enables users to engage in conversations with virtual versions of notable personalities like Billie Eilish or fictional characters through AI technology. Moreover, users can create their personalized chatbots and AI assistants. While the basic services are free, users seeking expedited access to chatbots can opt for a subscription model priced at $9.99 per month.
Character.AI has garnered significant traction among users aged 18 to 24, who represent approximately 60% of the website traffic, as indicated by data from Similarweb. By offering diverse functions and tones, the platform aims to establish itself as a leading provider of engaging personalized AI companions, distinguishing itself from competitors like OpenAI’s ChatGPT and Google.
Within the first six months of its launch, Character.AI reported an impressive 100 million regular website visits. The company is also exploring equity funding options from venture capitalists, with a potential valuation of \(5 billion. In a recent funding round led by Andreessen Horowitz, Character.AI secured \)150 million, valuing the company at $1 billion.
Confidential sources involved in the discussions with Google revealed that negotiations are ongoing, with the terms of the agreement subject to potential revisions. Notably, Google has been actively supporting AI startups, including allocating $2 billion in convertible notes to model maker Anthropic. Anthropic utilizes Google’s cloud services and the latest TPUs in its operations.
This investment trend aligns with the broader strategy of major tech companies, such as Microsoft, Google, Amazon, and OpenAI, engaging with AI firms to encourage the utilization of specific cloud services and hardware for model development and customer service provision. The U.S. Federal Trade Commission, represented by Chair Lina Khan, recently announced an investigation into potential anti-competitive practices related to cloud service investments in AI startups during a conference in San Francisco.
