Yet another bustling AI startup has been removed from the competitive landscape. This time, Google has rehired the AI leadership of Character.AI, encompassing co-founders Noam Shazeer and Daniel De Freitas. Both these individuals, who notably left Google to establish Character in 2021, did so because, as Shazeer publicly stated, they were disheartened by the search giant’s bureaucracy. A few years later, they are now returning to work within Google DeepMind, along with their research team of approximately 30 individuals. Character.AI’s approximately 140 remaining employees have been left to determine what lies ahead.
The unexpected “agreement” with Google is peculiar on numerous fronts. Firstly, although no company shares are officially changing ownership, investors in Character.AI are being compensated for the worth of their equity by Google at a valuation of $2.5 billion. Sources also inform me that employees are receiving cash at that valuation in proportion to their vested shares, and they will continue to receive payments at that price as their existing stock grants keep vesting. (Character.AI raised approximately $150 million to date and its latest known valuation was $1 billion.)