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Possibly an acquihire? Pure conjecture: They may have had difficulty competing with Streamlit[0] and decided to throw in the towel.

[0] https://streamlit.io/

Gradio is already integrated to some extent to HF's platform, and nothing is as trivial to build as it seems. So it just made sense to buy an existing refined solution and to hit the ground running rather than build from scratch.

I agree about the product; perhaps they were acquired for the people rather than the actual IP. Would make sense from that perspective for HF, which has leaned strongly in the text direction, if they want to expand in the AI space.

HF has expanded beyond text into image/video; gradio can do multimedia I/O.

Consider that they could have been bought for $1.

Maybe it's an "acqui-hire".