Sources: Google in Talks to Invest in AI Startup Character.AI

FILE PHOTO: An illuminated Google logo is seen inside an office building in Zurich, Switzerland December 5, 2018. REUTERS/Arnd Wiegmann/File Photo
FILE PHOTO: An illuminated Google logo is seen inside an office building in Zurich, Switzerland December 5, 2018. REUTERS/Arnd Wiegmann/File Photo
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Sources: Google in Talks to Invest in AI Startup Character.AI

FILE PHOTO: An illuminated Google logo is seen inside an office building in Zurich, Switzerland December 5, 2018. REUTERS/Arnd Wiegmann/File Photo
FILE PHOTO: An illuminated Google logo is seen inside an office building in Zurich, Switzerland December 5, 2018. REUTERS/Arnd Wiegmann/File Photo

Alphabet's Google is in talks to invest hundreds of millions of dollars in Character.AI, as the fast growing artificial intelligence chatbot startup seeks capital to train models and keep up with user demand, two sources briefed on the matter told Reuters.
The investment, which could be structured as convertible notes, according to a third source, will deepen the existing partnership Character.AI already has with Google, in which it uses Google's cloud services and Tensor Processing Units (TPUs) to train models.
Google and Character AI did not respond to requests for comment.
Founded by former Google employees Noam Shazeer and Daniel De Freitas, Character.AI allows people to chat with virtual versions of celebrities like Billie Eilish or anime characters, while creating their own chatbots and AI assistants. It is free to use, but offers subscription model that charges $9.99 a month for users who want to skip the virtual line to access a chatbot.
Character.AI's chatbots, with various roles and tones to choose from, have appealed to users ages 18 to 24, who contributed about 60% of its website traffic, according to data from Similarweb. The demographic is helping the company position itself as the purveyor of more fun personal AI companions, compared to other AI chatbots from OpenAI's ChatGPT and Google's Bard.
The company previously said its website had attracted 100 million monthly visits in the first six months since its launch.
Character.AI is also in talks to raise equity funding from venture capital investors, which could value the company at over $5 billion, sources said. In March, it raised $150 million in a funding round led by Andreessen Horowitz at $1 billion valuation.
The talks with Google are ongoing and terms of the deal could change, said the sources, who requested anonymity as the discussions are private, Reuters reported.
Google has been investing in AI startups, including $2 billion for model maker Anthropic in the form of convertible notes, on top of its earlier equity investment. Anthropic uses Google's cloud services as well as its latest version of TPUs.
That is part of a recent trend in which big tech cloud services providers are striking deals with AI companies to entice them to use certain cloud or hardware in the computer-intensive race to build models and serve consumers, including Microsoft investments in OpenAI and Google and Amazon's bets on Anthropic.



ChatGPT Adds Shopping Help, Intensifying Google Rivalry

FILED - 18 April 2023, Berlin: On the monitor of a cell phone you can see the ChatGPT logo. Photo: Hannes P Albert/dpa
FILED - 18 April 2023, Berlin: On the monitor of a cell phone you can see the ChatGPT logo. Photo: Hannes P Albert/dpa
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ChatGPT Adds Shopping Help, Intensifying Google Rivalry

FILED - 18 April 2023, Berlin: On the monitor of a cell phone you can see the ChatGPT logo. Photo: Hannes P Albert/dpa
FILED - 18 April 2023, Berlin: On the monitor of a cell phone you can see the ChatGPT logo. Photo: Hannes P Albert/dpa

OpenAI announced Monday that ChatGPT is now helping users find products online, enhancing its challenge to Google amid regulatory pressure on the search giant's market dominance.

The new shopping capability further blurs the line between AI chatbots and search engines, signaling OpenAI's ambition to compete with Google in a market the latter has controlled for decades.

"Search has become one of our most popular and fastest growing features, with over 1 billion web searches just in the past week," the San Francisco-based company said in a post on X.

Rolled out on Monday, the update allows shoppers to find and compare items through natural conversation, then connect directly to merchants for purchases.

"Instead of scrolling through pages of results, you can simply start a conversation," OpenAI's post said, adding that users could also ask follow-up questions or compare products.

ChatGPT's shopping feature initially focuses on fashion, beauty, and home electronics categories. Product recommendations are personalized and come from the web, not advertisements, OpenAI said.

To counter increasing competition from AI chatbots, Google has integrated its own Gemini assistant into search results, providing AI-generated answers above traditional website links.

The rivalry intensified last week when an OpenAI executive testified the company would consider purchasing Chrome if Google were forced to sell the browser as part of an ongoing US antitrust case.