Alphabet’s Google is reportedly in advanced discussions to invest hundreds of millions of dollars in Character.AI, a rapidly growing AI chatbot startup. This strategic investment aims to support Character.AI’s efforts in training models and meeting the escalating demand from users.

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The potential investment, likely structured as convertible notes, would deepen the existing partnership between Google and Character.AI, leveraging Google’s cloud services and Tensor Processing Units (TPUs) for model training.

Character.AI, co-founded by former Google employees Noam Shazeer and Daniel De Freitas, has gained popularity for enabling users to interact with virtual versions of celebrities and anime characters.

The platform, which already utilizes Google’s cloud infrastructure, offers a subscription model charging $9.99 (approximately Rs. 831) per month for users seeking priority access to chatbots.

Targeting users aged 18 to 24, who contribute to about 60 percent of its website traffic, Character.AI positions itself as a provider of entertaining personal AI companions compared to other chatbots like OpenAI’s ChatGPT and Google’s Bard.

The platform claims to have attracted 100 million monthly visits in the first six months since its launch.

Apart from the potential investment from Google, Character.AI is concurrently in talks to secure equity funding from venture capital investors.

This round of funding could value the startup at over $5 billion (approximately Rs. 41,605 crore), building on the success of a previous funding round in March where it raised $150 million (approximately Rs. 1,248 crore) led by Andreessen Horowitz.

While the discussions with Google are ongoing, the terms of the deal remain subject to change, as revealed by anonymous sources familiar with the matter.

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This move aligns with Google’s broader strategy of investing in AI startups to further enhance its position in the competitive AI landscape, demonstrating a trend where tech giants collaborate with AI companies to leverage specific cloud services and hardware resources.