The U.S. Federal Trade Commission (FTC) is investigating whether Google illegally acquired the artificial intelligence (AI) startup Character.AI, Bloomberg reported on the 22nd (local time).
Character.AI is a startup developing AI chatbots capable of conversing with both real people and fictional characters. It was co-founded in October 2021 by Noam Shazier and Daniel De Freitas, who left their positions as Google engineers.
Google revealed last August that they would rejoin after three years. Along with them, several other engineers from Character.AI also joined, and Google signed a non-exclusive licensing agreement for the AI technology owned by Character.AI. Sources said the FTC is investigating whether this agreement between Google and Character.AI violated antitrust laws or was an attempt to avoid scrutiny from competition authorities.
The agreement between Google and Character.AI has been evaluated as an efficient method for corporations in Silicon Valley to integrate expertise for new projects. However, the report noted that this agreement has also attracted the attention of regulators wary of tech companies using their influence to avoid competition with emerging innovative firms. This type of agreement could potentially be viewed as an indirect acquisition of startups while recruiting key talent such as founders and engineers, leaving the startup as a 'shell.'
A Google representative said, "Google is always willing to answer any questions from regulators," adding, "We are pleased that Character.AI talent has joined the company, but we have no equity stake and they remain a separate company."