Google’s $2.7B Character.AI Deal ‘Elevates Gemini’ Vs. Microsoft, AWS: Partners

‘The popularity of Agentic AI can be seen in the solutions built by Salesforce, ServiceNow, Glean and others, as well as the custom agents our clients are asking us to build using Google’s Gemini technology,’ says the CEO of a Google Cloud partner.

Google Cloud partners are hopeful that Google reportedly paying $2.7 billion to rehire AI guru Noam Shazeer along with key members of his Character.AI team and its technology will help elevate Google Gemini over competitors Amazon Web Services and Microsoft.

“Agentic AI IP is highly attractive right now in a time where everyone is quickly learning about AI and developing AI use cases, primarily through the means of agents,” said the CEO of a leading Google Cloud AI partner who declined to be identified.

“We are seeing significant demand for GenAI use cases that are built using Agentic AI or AI agents,” said the CEO. “Clients are asking us to build agents for a variety of customer-facing use cases and internal, operational use cases. Agentic AI has made GenAI something end users can touch and feel and has led to very creative use cases across industries.”

Google’s $2.7 billion deal with Character.AI included the hiring of Character.AI’s co-founder and CEO Shazeer, its co-founder and President Daniel De Freitas, and a license deal that enables Google to now license Character.AI’s technology, according to a report by The Wall Street Journal.

The Google Cloud partner CEO said he’s discovered through years of leading technology businesses that “hiring the right leader can create an inflection point like no other event can in a growing business.”

“If Noam Shazeer can lead to that inflection point for Google Gemini at this very critical time in the AI race, this will be a small investment over the long term of building a market leader,” the CEO said. “There is much to gain in this race so I certainly understand and can appreciate making a big bet.”

Google Cloud declined to comment on the matter.

Google Rehires Shazeer To Lead Gemini

Initially hired by Google as a software engineer in 2000, Shazeer was one of the first few hundred employees at Google.

He left the company in late 2021 to form AI chatbot startup Character.AI with De Freitas.

The Silicon Valley-based company quickly grew to become one of the world's hottest AI startups—reaching a $1 billion valuation by 2023.

In August, Google rehired De Freitas, Shazeer and other members of Character.AI’s research team to help lead Google’s AI research business unit, DeepMind.

Why Character.AI Will Help Google Gemini ‘Stay Ahead’ In AI

Shazeer is now a leader of Google’s Gemini AI unit that was built to compete against companies includng Microsoft-backed OpenAI’s ChatGPT.

“There’s no doubt that hiring Noam and his team and the technology is a move to out-innovate Microsoft, AWS and the others out there,” said one top executive from a Google Cloud and AWS channel partner who declined to be named.

The executive said hiring top AI talent is at a premium in today’s market.

“Google is trying to hire the best people to compete more against Amazon and Microsoft, and [Amazon and Microsoft] are doing the same thing. Here’s an instance where Google snatched up someone and some AI technology that everyone wants,” said the executive. “I think, in time, we’ll know if Google paid too much for their IP and hiring Noam. But from our point of view, this acquisition elevates Gemini and looks good for us.”

Google Cloud partners said they are seeing “significant demand” for generative AI use cases that are “using Agentic AI or AI agents.”

“The popularity of Agentic AI can be seen in the solutions built by Salesforce, ServiceNow, Glean and others, as well as the custom agents our clients are asking us to build using Google’s Gemini technology,” said the CEO of the Google Cloud partner.

Google-Character.AI Tech Deal

The deal enables Google to access Character.AI’s IP technology without having to go through the normal process of regulatory approvals that would need to happen if it was an acquisition.

As part of Google Cloud’s agreement, Character.AI will provide Google Cloud with a non-exclusive license for its current large language model (LLM) technology with the goal of building more personalized AI products for users.

Partners said Character.AI’s technology is another tool in Gemini’s toolbelt during a time when agents enable AI platforms to grow market share.

“The current technology Character.AI brings, along with their engineers and the products they are developing, will help Google continue to stay ahead in the AI race,” the CEO said.

Shazeer Leaves Google After Chatbot Denied

The Journal reported that Shazeer allegedly left Google in 2021 because the Mountain View, Calif.-based cloud giant refused to release an AI chatbot that Shazeer developed with De Freitas, who is also a Google alumni.

While at Google, Shazeer and De Freitas reportedly created a chatbot in 2017 that could intelligently interact with humans, according to the Journal. Shazeer thought the chatbot would eventually replace Google’s highly popular search engine.

The Journal said Google executives, at the time, believed the risk was too high to launch the chatbot due to safety concerns. Shazeer quit Google soon afterward in 2021.

New Gemini Launches

Google Cloud recently unveiled new AI-powered offerings, including the blockbuster news that Google’s Gemini AI models are now being integrated as part of its Workspace portfolio.

“Now, millions of Workspace customers can access the benefits of AI while knowing that their organization’s privacy, security and compliance policies will be upheld,” said Aparna Pappu, general manager and vice president of Google Workspace, during Google’s virtual Gemini at Work online event last month.

The company also launched a new Customer Engagement Suite with Google AI, which combines the company’s Contact Center AI with its latest GenAI technology.

During Google’s most recent quarterly earnings call, CEO Sundar Pichai said there are now more than 1.5 million developers using Gemini across Google’s developer tools and that “Gemini is making Google’s own products better.”