The new AI deal: buy everything but the company
Google. They said the tech giant moved too slowly. So they created Character.AI, a chatbot startup, and raised nearly $200 million.
Last week, Shazeer and De Freitas announced that they were returning to Google. They had struck a deal to rejoin its AI research arm, along with roughly 20% of Character.AI's employees, and provide their startup's technology, they said.
But even though Google was getting all that, it was not buying Character.AI.
Instead, Google agreed to pay $3 billion to license the technology, two people with knowledge of the deal said. About $2.5 billion of that sum will then be used to buy out Character.AI's shareholders, including Shazeer, who owns 30% to 40% of the company and stands to net $750 million to $1 billion, the people said. What remains of Character.AI will continue operating without its founders and investors.
The deal was one of several unusual transactions that have recently emerged in Silicon Valley. While big tech companies typically buy startups outright, they have turned to a more complicated deal structure for young AI companies. It involves licensing the technology and hiring the top employees — effectively swallowing the startup and its main assets — without becoming the owner of the firm.
These transactions are being driven by the big tech companies' desire to sidestep regulatory scrutiny while trying to get ahead in AI, said three people who have been involved in such agreements. Google, Amazon, Meta, Apple and Microsoft are under a magnifying glass from agencies like
