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On August 3, Character.ai internally stated that Google would acquire its investor shares at a valuation of $2.5 billion ($88 per share), higher than the previous valuation of $1 billion, but still lower than the $5 billion the company negotiated with early investors last year.

Previously, Character.ai received more than $150 million in financing from investors such as a16z and Greycroft. Google provided Character.ai withcloud computingServices, advanced chip usage rights and convertible bond financing.

Google's "acquisition" of Character.ai, its cooperation with Microsoft & Inflection and Amazon & Adept, Character.ai co-founder Noam Shazeer and president Daniel De Freitas will return to Google and join the DeepMind research team.

In addition, 30 Character.ai employees working on models and voice AI will also join Google to participate in the Gemini AI project.

Character.ai has about 100 employees left and will continue to operate independently. General Counsel Dom Perella will serve as interim CEO while searching for the next permanent CEO.

After Google's "acquisition" of Character.ai, the company will use a fund to pay employee options until the end of July 2026. The funds will come from a licensing agreement with Google. Character.ai will also switch to open source models such as Llama3.1 instead of internal models.

On Wednesday, media reported that xAI, owned by Elon Musk, the world's richest man, had discussed acquiring Character.AI, an artificial intelligence chatbot startup. But Musk quickly denied the report.

Musk issued a statement at X that day saying that his artificial intelligence startup xAI is not considering acquiring Character.AI.