WHY GOOGLE BOUGHT CHARACTER AI

Summary from the TLDR newsletter

Google may have bought Character AI because Character AI had figured out how to run its models without costing a fortune. Character AI was able to serve millions of users without bleeding money. Google is now giving away flash models for free on AI Studio - this wouldn't be possible without figuring out how to make inference really cheap. Pre-training has hit diminishing returns, so companies are shifting toward chain-of-thought prompting and inference-time optimizations.