Google and Character AI have been linked in three ways: a cloud computing partnership announced on May 10, 2023, a non-exclusive technology license with the founders' return to Google DeepMind announced on August 2, 2024, and, from 2026, shared legal exposure over teen-harm lawsuits. Character AI announced a voluntary Chapter 11 process on October 12, 2026, and the reports reviewed do not describe any role for Google in the sale.
Key takeaways
- The 2023 Google Cloud agreement made Google Cloud the preferred infrastructure provider for training and running Character AI's language models.
- In the 2024 deal, Character AI gave Google a non-exclusive license to its current language model technology, and co-founders Noam Shazeer and Daniel De Freitas returned to Google.
- A Florida federal case named Google, Character Technologies, and both founders as defendants before a settlement in principle was reported in January 2026.
- The settlement terms were not disclosed, so the amount, if any, is unknown.
- The FTC's September 2025 inquiry sent separate orders to Alphabet and to Character Technologies.
The 2023 cloud partnership
The first link was infrastructure. In a press release dated May 10, 2023, the two companies said Character AI would use Google Cloud's Tensor Processing Units to train and run its language models. It would also use new A3 virtual machines built on NVIDIA H100 GPUs, which gave it a choice between the two chip types. The release added that Character AI already used AlloyDB and planned to deploy Cloud Spanner to expand into more regions.
The release names no monthly user count or contract value. It describes a community of millions without giving a figure. A cloud agreement of this kind makes Google a supplier, not an owner: Character AI stayed an independent company with outside investors.
The August 2024 license and the founders' return
On August 2, 2024, Character AI announced that Shazeer and De Freitas, who founded the company in 2021, were going back to Google's AI unit, DeepMind, together with some members of the research team. The company said it would give Google a non-exclusive license to its current large language model technology, and that the arrangement would bring it more funding. A Google spokesperson told CNBC that the company was thrilled to welcome Shazeer back. Both founders were described as former Google engineers, and Shazeer said he was excited to join the DeepMind team.
The structure matters. A non-exclusive license plus a hiring of key staff is a different transaction from buying a company, so Character AI kept operating under new leadership. Press outlets reported a price of roughly USD 2.7 billion based on unnamed sources, but the company announcements reviewed here gave no figure, so the number is left out of the table below.
| Date | Step | Google's position |
|---|---|---|
| May 10, 2023 | Cloud partnership | Infrastructure supplier |
| August 2, 2024 | Non-exclusive license, founders return | Licensee and employer of the founders |
| September 11, 2025 | FTC information orders | Alphabet and Character Technologies receive separate orders |
| January 2026 | Settlement in principle, Florida case | Co-defendant |
| October 12, 2026 | Chapter 11 announced | No role described in the reports reviewed |
Why Google ended up in the courtroom
Megan Garcia sued after the death of her 14-year-old son, Sewell Setzer, who had used the chatbot service. The case was filed in the U.S. District Court for the Middle District of Florida. News coverage reported on January 8, 2026 that the parties informed the court of a mediated settlement in principle covering Garcia, Character Technologies, Shazeer, De Freitas, and Google, and asked the court to pause the case for 90 days while documents were finalized. Reports from CBS News and other outlets say related cases in other states were also being resolved, and that terms were not disclosed.
The legal link between a licensee and a chatbot maker is a question the settlement did not answer, because no court decided it. Anyone reading about the case should treat claims from either side as allegations unless a judgment says otherwise.
Regulators looking at both companies
On September 11, 2025, the Federal Trade Commission issued orders under its 6(b) authority to seven companies. Alphabet and Character Technologies were listed separately, alongside Instagram, Meta, OpenAI, Snap, and xAI. The commission asked how companies monetize engagement, create and approve characters, test for harm, and handle children's data. The agency frames such a study as broad fact-finding, not enforcement, so the orders are information requests and not charges.
The October 2026 bankruptcy
Character AI's blog post of October 12, 2026 says the company has started a voluntary Chapter 11 process to run a court-supervised sale, expected to finish by late November or early December 2026. CBS News reported a USD 20 million Disney payment for rights to some Character AI intellectual property, and NBC News described Disney as the stalking-horse bidder, which means a higher offer could still win. The same NBC report mentioned the 2024 Google license and the settled Florida case as background. Whether Google keeps any rights under its 2024 license after a sale is not addressed in the sources reviewed.
FAQ
Did Google buy Character AI?
No. The 2024 agreement was a non-exclusive license to technology plus the return of the founders to Google, and Character AI stayed a separate company. It later entered Chapter 11 on its own.
Where do the founders work now?
They announced their return to Google DeepMind in August 2024. The sources reviewed do not give their current roles, so this article does not state them.
Was the Google lawsuit settled?
A settlement in principle was reported in January 2026, and the sources reviewed describe the terms as undisclosed. Readers can check the court docket for the final filings.
Does Character AI still run on Google Cloud?
The 2023 release announced the partnership, and no later source reviewed says whether it continues. Current infrastructure details are therefore unverified.
Related reading
- Character AI explained: product and teen limits
- How Character AI monitoring works
- Google's Gemini model launch
- An introduction to Google's LaMDA
More in AI Blog.
Last verified: October 2026
Sources
- Google Cloud press release on the Character AI partnership, May 10, 2023
- CNBC report on the founders rejoining Google, carried by NBC Bay Area, August 2, 2024
- Federal Trade Commission press release on its companion chatbot inquiry, September 11, 2025
- News report on the Florida settlement notice, January 8, 2026
- Character AI, Google Agree to Settle Teen Chatbot Harm Lawsuits, January 2026
- Character AI company blog post on the Chapter 11 process, October 12, 2026
- CBS News report on the bankruptcy filing, October 13, 2026
- NBC News report on the Disney asset sale, October 2026