Character.AI: Startup Run by Ex-Google Devs, a Meta Competitor? 

Key Takeaways

• Customizable chatbots have emerged as a significant trend in AI.
• Character.AI is one of the leading startups in the space.
• Big Tech firms, including Meta and Google, have also launched AI customization platforms.

From AI companions to richer non-player characters (NPCs) in video games, it’s impossible to ignore the rise of customizable language models and the platforms using them to deliver more personalized AI services.

Google, OpenAI, and, most recently, Meta have all developed their own spin on the build-your-own-chatbot concept. Now, Character.AI, a relative newcomer in the tech scene yet highly successful, may cause concerns for its Big Tech equivalents. 

xAI Reportedly Eying Customizable AI Acquisition

In an initial report by The Information, xAI’s leadership discussed potentially buying Character.AI, a Silicon Valley startup that builds conversational applications that let users create characters and converse with them.

Responding to the rumor, Elon Musk dismissed it as fake news , accusing the publication of spreading misinformation. 

Nevertheless, the alleged deal would make a lot of sense for the company as it tries to position Grok as a viable ChatGPT alternative. 

Ex-Google Devs Create Character.AI

Launched by ex-Google developers Noam Shazir and Daniel De Freites in September 2022, Character.AI hosts over a million user-created characters, ranging from personal assistants to depictions of historical figures. But in 2024, it faces emerging competition from some of the biggest names in AI.

Most notably, OpenAI launched customizable GPTs in November, followed by the GPT Store in January. 

Google, for its part, unveiled Gems in May, although the option to customize Gemini hasn’t yet been fully rolled out.

Finally, on Monday, July 29, Meta announced the release of its AI Character Studio, a chatbot-building platform integrated with Facebook and Instagram.

Competing With Big Tech 

With more models listed on its chatbot marketplace than the GPT Store, Character.AI is currently in a good position. But with more Big Tech firms entering the fray, it could soon find itself dramatically outgunned. 

The platform’s underlying language model excels at the art of personality. However, its ability to search the web, grasp complex topics, and process multimedia inputs is poor compared to larger, more powerful Big Tech models. 

Conversing with the Napoleon Bonaparte is amusing. But the masses of historical figures, anime characters and AI girlfriends that currently populate the site are a far cry from the vision depicted by Google, Meta and OpenAI.

As the technology evolves, the first big prize will probably be business applications like customer service chatbots and domain-specific assistants.  For these, personalized chatbots need the ability to tap into private data sources, something Meta’s open-source models lend themselves to.

Meanwhile, on the closed model front, Apple, Google and OpenAI are also devoting a lot of attention to the problem, designing new cloud solutions that let users train custom AIs without sending reams of unencrypted data to Big Tech servers.

Amid these competing approaches to AI customization, Character.AI is ultimately a small fish in a big pond, but that doesn’t mean it can’t still thrive.