In 2022, Noam Shazeer and Daniel De Freitas left their jobs at Google as Google was too slow and set up their own AI startup Character.AI which develops chatbots. In August 2024, Google struck a deal with them. They rejoined Google, together with 20 per cent manpower of Character.AI and provide Character. AI’s technology to Google. In fact, it is not a buy out of Character.AI, but involves licensing the technology, and recruiting the top employees. It is a swallow up of the startup, and its most precious assets — the manpower, without becoming the owner of the firm. The licensing fees agreed are $3 billion, Character.AI’s shareholders including Shazeer with a stake of 30 to 40 per cent stands to gain $750 million to $1 billion. The remains of Character.AI will continue as an entity without its founders and investors.

Such unusual deals are happening in Silicon Valley recently. Big Tech resorts to such complicated deals for acquiring startups. The idea is to obtain licensing technology and poach the top employees. It is a way to sidestep regulatory scrutiny, especially the FTC. It is non-traditional deal.

Microsoft started the trend by agreeing to pay the startup Inflection more than $650 million to license its technology and hire almost all its employees, including its founder Mustafa Suleyman. Suleyman now heads the consumer AI business of Microsoft.

Amazon similarly acquired Adept.