The employee Google paid $2.7 billion to get back

Earlier this year, Google paid Character.AI, an AI-chatbot startup, $2.7 billion to license its technology.

But the deal included another stipulation (the one that mattered the most to Google, according to employees): that co-founder Noam Shazeer, who quit Google in 2021 to start Character, come back to work for the tech giant again.

Who’s Noam Shazeer? A man who could reasonably walk up to any AI and say “I am your father.” In 2017, he published a paper with seven other Google researchers called “Attention is All You Need,” which detailed a computer system that could reliably predict the next word in a sequence when prompted by humans. And if this sounds familiar – it’s because it became the underpinning of the generative AI tech that followed.

As outlined by the Wall Street Journal:

• While at Google, Shazeer teamed up with a colleague, Daniel De Freitas, to build a chatbot originally named Meena that could banter confidently on a range of topics.
• But the company declined to release it to the public, citing safety and fairness concerns, leading the pair to quit and launch Character – which was built around the idea that people would pay to interact with chatbots that can provide practical advice or mimic celebrities like Elon Musk and fictional characters like Percy Jackson.

AI wheeling and dealing

Google isn’t the only organization who’s acquired an AI company without actually acquiring an AI company. Microsoft and Amazon have made similar deals this year, in large part to lock up talent and avoid regulatory scrutiny.

In the know: Many of the deals, including the Character.AI-Google tie-up, have also occurred as a result of fundraising fatigue.

• Developing AI is a costly business, meaning startup founders – many of whom are engineers – are forced to spend their time raising money instead of writing code. Being “purchased” by a large tech organization provides a large payout, and offers the ability for them to focus on development instead of feeding the money machine.

🤖💰 Brrrrrr: Organizations are projected to spend $235 billion on AI this year, with this figure expected to increase to $630 billion by 2028 (30% CAGR), according to research firm IDC.