Character.AI files for bankruptcy five years after founding
The company agreed to sell some assets to Disney, but no buyer for the rest has been found yet.
Money#02
5 years
From founding to Chapter 11 filing
Image: TechCrunch
5 yearsFrom founding to Chapter 11 filing
The short version
- Character.AI, which lets users create AI characters and chat with them, has filed for Chapter 11 bankruptcy.
- The filing follows a slew of lawsuits and struggles to scale its popular platform.
- The company said it had assets and liabilities between $50 million and $100 million.
- It agreed to sell some assets to Disney for $20 million, along with a non-exclusive perpetual license for its technology.
Why it matters
The filing shows how hard consumer-facing AI products are to scale and monetize. Higher usage also raises AI costs, which adds pressure to charge users more.
“We hope that the sale process will yield an actionable proposal that will allow continued operations of the Character.ai platform.”
What people are saying
Commenters pointed to Google's $2.7 billion deal in 2024 and the departure of the founders and staff, and said the ban on minors may have cut much of the user base. Some asked what will happen to the personal data the company holds on users.