Character.AI is a free to use platform that allows users to engage in open-ended conversations with virtual versions of anime characters or celebrities. Credit: Ascannio/Shutterstock.com.

Alphabet’s subsidiary Google is planning to invest ‘hundreds of millions of dollars’ in artificial intelligence chatbot startup Character.AI.

The AI startup, which was founded by former Google employees Noam Shazeer and Daniel De Freitas, is currently seeking investment to train its AI model as well as to address the increasing user demands, two sources familiar with this matter told Reuters.

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Another source informed Reuters that Google’s investment, if and when finalised, could be structured as convertible notes.

Google is currently in discussion to invest in Character.AI and the terms of this deal may vary, people familiar with the development told Reuters, requesting anonymity as the discussions are not public.

The potential investment will further bolster the existing partnership between Google and Character.AI, as part of which Character.AI leverages Google’s cloud services and Tensor Processing Units (TPUs) to train models.

Based on neural language models, Character.AI is a free to use platform that allows users to engage in open-ended conversations with virtual versions of anime characters or celebrities, such as Billie Eilish.

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The platform also enables users to create their own AI assistants and chatbots, with an option to choose from different roles and tones.

Users who want to skip the virtual line to access Character.AI’s chatbot can even choose the $9.99 subscription option for a month.

Character.AI’s chatbots mainly appeal users between 18 and 24 age group, the report added.

Earlier, the company also confirmed that its website attracted 100 million monthly visits in the first six months of its launch.

Apart from the latest investment discussions, Character.AI is also planning to raise equity funding from venture capital investors.

Sources told Reuters that this potential investment from venture capital is expected to value the company at over $5bn.

In October this year, Character.AI released with a new group chat feature for the iOS and Android applications.