Google hesitated on his chatbot, now spends $2.7 bn to rehire AI pioneer

Google acquired Noam Shazeer's AI startup Character.AI in a $2.7 billion deal with a stipulation that Shazeer starts working for them again

As the competition for AI dominance intensifies, tech giants are spending vast sums to acquire top talent. Google’s recent multi-billion dollar decision to bring back Noam Shazeer, one of AI's key innovators, stands out as a major move. 

Shazeer is known for his contributions to research that sparked the current AI surge. His return to Google marks more than just a high-profile hiring—it signifies a crucial moment in the ongoing AI revolution.

Shazeer’s exit and re-entry at Google

Shazeer first joined Google in 2000, contributing to significant advancements, including refining its search engine and spearheading important AI projects, as noted by The Wall Street Journal. However, after Google hesitated to launch an AI chatbot he had developed, Shazeer chose to leave the company and create Character.AI in 2021. His departure was seen as a critique of Google’s “cautious approach” to AI innovation.

By 2023, Character.AI faced financial challenges despite its early success. That’s when Google made a strategic move, acquiring the startup in a $2.7 billion deal that also brought Shazeer back to the company. Now, he’s poised to lead Google's AI initiatives, particularly focusing on their next big AI project, Gemini.

Although the acquisition was primarily about Character.AI’s technology, securing Shazeer’s expertise was a major win for Google. At 48, he is now one of three leaders shaping Google’s AI strategy. His return, coupled with a substantial financial package, underscores Shazeer’s influence in the AI sphere.

The rise and challenges of Character.AI

Shazeer’s exit from Google was anything but quiet. After co-authoring the influential paper ‘Attention is all you need,’ which laid the groundwork for generative AI, he sought to push the boundaries of AI development, the report noted. Together with former Google colleague Daniel De Freitas, Shazeer created an ambitious chatbot named Meena, designed to engage in conversations on a wide range of topics. His goal? Replace Google’s search engine with AI and generate massive profits.

However, Google’s decision not to release Meena due to concerns about safety and fairness led Shazeer and De Freitas to form Character.AI, WSJ said. Initially, the startup gained momentum, raising $150 million and reaching a valuation of $1 billion by 2022. But soon after, it encountered hurdles. While Character.AI drew in over 20 million monthly users, the platform struggled to cover the high costs of AI development. 

Additionally, user behaviour diverged from Shazeer’s vision, with many engaging in romantic role-play with chatbots—far from the practical applications he had envisioned. These challenges, along with tough competition from companies like OpenAI and Microsoft, left Character.AI facing financial uncertainty.

Google reclaims Shazeer

As Character.AI’s prospects dimmed, Shazeer explored new avenues for funding, including potential buyers such as Meta. Ultimately, Google presented the most attractive offer. The acquisition included Shazeer’s significant payout, the integration of 30 Character.AI employees, and the retention of De Freitas. While Character.AI continued to operate, it did so without its founding leadership.

Meanwhile, Google’s acquisition reflects a broader trend in the tech world. Companies like Microsoft and Amazon are similarly striking deals with struggling AI startups to bring in talent without facing regulatory hurdles. However, the acquisition of Character.AI was as much about securing Shazeer as it was about acquiring the technology.

Now back at Google as a vice president, Shazeer’s primary focus is once again on AI research. With a team that includes De Freitas, he is now working on Gemini, a project aimed at advancing AI technology.