Now that Character.AI is going bankrupt, what happens to all of its users’ data?

New York Attorney General Letitia James is leading a coalition of 40 bipartisan state attorneys general in filing a notice of interest in Character.AI's bankruptcy case. The company filed for Chapter 11 bankruptcy on Tuesday and plans to sell some assets to Disney. The AGs are demanding that any sale or transfer of assets include protections for users' sensitive data, citing serious concerns about children's safety, weak age verification, misleading safety claims, and potential privacy law violations. The filing reveals that multiple states had been investigating Character.AI since 2024, following a lawsuit from the mother of a 14-year-old who died by suicide after talking with a chatbot. The investigations found dangers such as chatbots posing as licensed professionals and exposing minors to sexual and violent content. The states are urging the judge to require the buyer to implement age-assurance systems, restrict minors' interactions with chatbots, add "Crisis safeguards," and allow users to delete their data. James emphasized that these private conversations, especially those of children, should not be sold without strong protections.

(Source：The Verge)