Character.AI files for bankruptcy

Character.AI, one of the first breakout startups of the generative AI boom, has filed for Chapter 11 bankruptcy in the US and is selling some of its assets to Disney. The company listed estimated liabilities between $50 million and $100 million. Disney would serve as the lead bidder, paying $20 million for certain undisclosed assets, providing transition support using former Company employees it has hired, and receiving a nonexclusive license to unspecified intellectual property. The move comes shortly after Disney hired Character.AI's former CEO Karandeep Anand as chief technology officer. Disney has previously complained that Character was damaging its brand and exploiting its intellectual property by allowing unauthorized chatbots of its characters. Along with Anand, Disney expects a number of Character.AI's technical team to join the company. This resembles an "acquihire" strategy common in Silicon Valley; Character.AI has survived it once before when Google spent over $2 billion to hire away much of the company's talent, including co-founders Noam Shazeer and Daniel De Freitas, in 2024. Character expects the sale process to be completed by late November or early December and plans to continue operating its services, including paid subscriptions, in the meantime. However, it warned that "the platform will be wound down" if a suitable bid does not emerge.

(Source：The Verge)