Google invests in AI startup for young people

The search giant's investment may be structured as a convertible bond. Character.AI is also using Google's cloud services and Tensor Processing Units (TPUs) for AI tasks.

The AI ​​startup was founded by former Googlers Noam Shazeer and Daniel De Freitas. The company specializes in developing virtual versions of celebrities or anime characters to interact with users.

Character.AI's app is available for free, but customers can pay extra ($9.99/month) to access the chatbot directly.

Character.AI’s chatbots, which come in a variety of colors and roles, are popular with users aged 18 to 24, according to data from Similarweb. This age group contributes 60% of the site’s traffic.

Character.AI is approaching virtual assistant building from a demographic perspective, positioning its personalized chatbots as more interesting than OpenAI's ChatGPT or Google's Bard.

The company said its website 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 capitalists, which could value the company at more than $5 billion, sources said.

In March 2023, the company raised $150 million in a funding round led by Andreessen Horowitz at a $1 billion valuation.

In addition to Character.AI, Google is investing in another promising AI startup, Anthropic, in the form of a $2 billion convertible bond, in addition to its previous equity investment.

Anthropic uses Google's cloud services as well as the latest version of TPU.

It's part of a recent trend in which major tech cloud providers sign contracts with AI companies to entice them to use certain clouds or hardware, in a fierce race to meet consumer demand.

The moves have drawn regulatory attention. Federal Trade Commission Chairwoman Lina Khan said last week that the agency is looking into cloud providers’ investments in AI startups over concerns of anticompetitive behavior.