Inside Google's $2.7 billion deal to rehire AI genius Noam Shazeer — and why he quit in 2021

Noam Shazeer now leads Google's efforts to advance its next-generation AI technology, Gemini. (Image credit: @shawnchauhan1/X)

Google has rehired one of the leading minds behind the AI boom, Noam Shazeer, shelling out a massive $2.7 billion to secure his return in what is seen in Silicon Valley as the tech giant’s desperation to lead the AI race, especially at a time when competition in artificial intelligence is intensifying.

Shazeer, 48, the co-author of a 2017 research paper ‘Attention is All You Need’ that paved the way for today's generative AI models, had left Google in 2021 after a fallout over the release of a chatbot he developed. He went on to co-found Character.AI, a company that soon found itself struggling in a fierce market dominated by behemoths like OpenAI and Microsoft.

Google's official statement claims the $2.7 billion payment was primarily for licensing Character.AI’s technology, but Wall Street Journal reports that sources with knowledge of the deal say it was largely motivated by Shazeer's rehiring as the payout was massive for a founder who didn’t sell his company or take it public.

Shazeer and Google

Shazeer’s relationship with Google dates back to 2000, when he was among the company’s first few hundred employees. Early in his tenure, he made a name for himself by improving the search engine’s spelling correction system.

He later teamed up with colleague Daniel De Freitas to develop a chatbot named Meena, which was designed to engage in complex conversations across a range of topics. He predicted that Meena could replace Google’s search engine and generate trillions of dollars in revenue.

However, Google’s leadership, concerned about the potential risks around safety and fairness, chose not to release Meena to the public.

Frustrated by Google’s cautious approach, Shazeer and De Freitas left the company in 2021 to found Character.AI, with a vision to create chatbots capable of mimicking both celebrities and fictional characters, aiming to capitalise on AI's potential for providing companionship and practical advice. Character.AI rapidly gained attention, raising $150 million in funding and being valued at $1 billion.

However, the company soon faced challenges, including managing inappropriate user interactions and the high costs of development, which eventually led Shazeer to seek new financial backing.

Character.AI engaged potential buyers, including Meta, before ultimately sealing the deal with Google. Shazeer now leads Google's efforts to advance its next-generation AI technology, Gemini, alongside two other senior researchers.

His rehire also highlights a broader trend: tech companies increasingly spending exorbitant amounts to acquire talent under the guise of technology licensing deals. Microsoft and Amazon have followed similar playbooks this year, sidestepping traditional acquisitions to poach key personnel from smaller AI startups.