Opinion
Big Tech is busy wrapping up AI talent to dominate the market
Summary
- Tech giants like Microsoft and Google have found a new way to dominate the GenAI industry: Instead of buying AI startups, they hire the best minds around. While this helps them dodge antitrust scrutiny, startups starved of critical talent would make for market that’s less evenly contested.
Big Tech is following a crafty playbook to hoover up AI talent: Instead of buying the hottest AI startups, the giants hire their leadership and license their intellectual property, essentially sucking the life out of them. So long as they leave behind the shell of a company, antitrust scrutiny can be avoided.
Alphabet’s Google [which just had bad news in the form of a court ruling against it for its search market monopoly], is the latest to follow this template by hiring the co-founders of Character.ai, Noam Shazeer and Daniel De Freitas, along with a few other employees.
Most of the startup’s staff will remain with the smaller company while its general counsel will become CEO. Why a lawyer? Because Google is entering a licensing agreement to use Character.AI’s technology—in addition to buying out the startup’s investors, principally Andreessen Horowitz, who’d put in more $150 million.
Microsoft last year hired the founding team behind Inflection, a high-flying startup that was also creating an AI companion. Amazon.com then hired the team at Adept, a San Francisco-based firm co-founded by former OpenAI and Google researchers.
Also read: Big Tech’s AI race has one main winner: Nvidia
It’s a sleight of hand that reaps big benefits for tech giants, who can afford the vast computational power and data needed to build Generative AI, but struggle to attract the best talent. Now they can do the latter too.
Shazeer is a big hire for Google, which has grappled with glitches in its flagship AI model Gemini that could hinder its efforts to catch up to Microsoft and Amazon in the cloud wars. So venerated is Shazeer that Google may be paying him in the tens of millions of dollars (or more) to rejoin the company.
He was one of the lead inventors of the Transformer, a powerful blueprint for AI systems that formed the basis of the recent boom. Back in 2017, he was perhaps the most respected Google scientist named on a landmark research paper detailing how the Transformer could exploit powerful AI chips to quickly process and generate information.
Google was slow to capitalize on the technology, but OpenAI made the Transformer the basis of ChatGPT (it’s what ‘T’ stands for). All eight authors of the research paper left Google, mostly to start companies that raised billions of dollars thanks to their pedigree, including two who co-founded Adept.
When Shazeer co-founded Character.ai, he was continuing work that Google had shut down, to build lifelike chatbots that humans could use as companions. Character.ai went on to become one of the most popular AI apps outside of ChatGPT, particularly with teenagers.
The app lets you chat with a bot specially-trained to emulate a celebrity, fictional character or historic figure, and several teens have told me they spend hours a day on the app, role-playing or chatting with an artificial confidante.
Shazeer’s goal was to create an AI model that could remember everything about you. “A person has probably heard or read hundreds of billions of words in their lifetime, so that’s about the scale of data that you need—a quarter of a gigabyte—to have a lot of context on a person’s life," Shazeer told me in January.
“This is not beyond the realm of feasibility as we improve our algorithms… The model would know billions of things about you when it’s talking to you."
Also read: Struggling AI startups look for a bailout from Big Tech
However intriguing that vision is, Shazeer will now be bringing it back to his old bosses at Google, where he’ll likely have more sway than he did before, perhaps by working directly with Google DeepMind CEO Demis Hassabis.
The question is whether the likes of Meta or Elon Musk’s X.ai will follow a similar acqui-hiring strategy. Both reportedly looked into picking up Character.ai, before Shazeer went to Google, but there are other AI companies in the market that are likely grappling with the costs of building their technology amid unclear revenue prospects.
Cohere, a Canadian AI start-up founded by another author of the Transformer paper, is likely in play, along with Perplexity, a San Francisco startup that is competing with Google on AI search.
Even the founders of Anthropic and OpenAI, the two AI startups that have raised $8.8 billion and $11.3 billion respectively, must surely be glancing at the exit doors.
OpenAI could lose $5 billion this year, according to an analysis by The Information, which looked at the company’s internal financial data, meaning it will need to raise more cash one way or another.
The US Federal Trade Commission is scrutinizing what Microsoft and Amazon are doing, but there’s no indication they will turn into formal probes or hit deals.
Also read: AI is coming for India’s famous tech hub
More likely: We’ll see tech giants gobble up more leaders of the GenAI industry, consolidating power as they ride out the current market rout right under the noses of regulators. Perhaps this is what AI startups had expected. ©bloomberg
