Social RoboticsCharacter.AI files for Chapter 11 bankruptcy
The companion chatbot platform cited legal, regulatory and operational pressures and put itself up for sale.
Character.AI filed for Chapter 11 protection five years after its founding, with CEO Colin Adams pointing to significant legal, regulatory and operational headwinds. Disney agreed to buy some assets for $20m along with a non-exclusive licence to the technology, but no bidder had emerged for the rest, and the company said the service would be wound down if none appeared. The firm had faced lawsuits over teenage users, a Texas investigation and rising AI costs, and had banned minors from open-ended chats. Its collapse is a landmark for the AI companion industry, showing how safety liabilities and costly engagement-driven models can undermine even a popular service.
Source: TechCrunch
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