Character.AI, a controversial generative AI startup that lets users create their own chatbot characters, has filed for Chapter 11 bankruptcy. The company, which lost key talent to Google and had its former CEO hired by Disney, has allowed Disney to make the first offer on its assets, set at $20 million and pending higher bids. Character.AI expects the sale to be completed by early December.
In a blog post, the company said it filed for Chapter 11 protection to facilitate the sale of the company and its assets, listing liabilities of between $50 million and $100 million. As the lead "stalking horse" bidder, Disney would buy certain assets and provide transition support using staff it previously hired from Character.AI. The platform's services will continue, but could be shut down if no buyer is found.
The site, which first appeared in 2022, ran into problems common to AI companies of this nature. Pennsylvania sued Character.AI over chatbots pretending to be doctors, and Texas investigated the company over what the state attorney general called "misleading" mental health claims. Disney issued a cease-and-desist order over the use of its cartoon characters and banned teens from talking to its chatbots last year.
Despite once accusing Character.AI of damaging its brand, Disney last year hired the company's former CEO, Karandeep Anand, as its chief technology officer. Earlier, Google spent $2 billion hiring away much of the company's talent, particularly co-founders Noam Shazeer and Daniel De Freitas.
Source: Engadget · Summarized by HeadlinesBriefing