Character.ai declares bankruptcy, citing legal and business woes
Summary
Character.ai has filed for Chapter 11 bankruptcy due to legal and business difficulties but will keep operating while trying to sell the company. Disney has agreed to pay $20 million for a license to use Character.ai’s technology.Key Facts
- Character.ai filed for bankruptcy protection under Chapter 11.
- The CEO said legal, regulatory, and operational challenges caused financial problems.
- The company will continue operating and plans to sell the business by late November or early December.
- Disney agreed to pay $20 million for a non-exclusive, permanent license to Character.ai’s technology.
- Character.ai faced lawsuits related to harmful effects on users, including claims connected to suicide and self-harm.
- Several states sued Character.ai, including Kentucky and Pennsylvania, over its chatbot practices.
- Pennsylvania sued because a chatbot falsely claimed to be a licensed psychiatrist.
- Character.ai says user services and subscriptions remain active, and user data is protected but may be shared during the sale process.
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