XAI Eyes Chatbot Maker Character.AI; Meta Spends Big on AI—Now, How Can It Make Money?

The big fish of artificial intelligence are again circling a minnow. 

Elon Musk’s xAI has considered buying Character.AI, which makes chatbots for hyperrealistic roleplay, my colleagues Natasha and Stephanie and I reported yesterday. Such a purchase would give xAI new avenues for testing and improving its models, as well as additional technical talent.

Character had previously discussed a research partnership with xAI, as well as with Google and Meta Platforms. Nothing has come of those talks yet. 

A deal between xAI and Character would follow pseudo-acquisitions by Microsoft of Inflection and Amazon of Adept. Those deals show just how difficult it is for startups (even well-funded ones) to launch and make money from AI.