alt Hacker NewsCharacter.ai has initiated voluntary Chapter 11 bankruptcy
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character.ai - the tobacco company AI equivalent - who's business model it was to lull users in with highly-unstable AI 'friends', which was a bad idea from the start as most normal thinking people would assume, yet predatory VCs funded that shitshow and that far too long, and many scandals and even suicides followed from it that could have been avoided. Companies and their executives must be held personally accountable for knowingly detrimental effects on society and their users - that's the only way regulation for the benefit of users actually works.
It's a real disgrace that companies like Google and Disney acquired people from them - it displays those companies' true values and motives: profit at any fckin human prize.
”Character.ai’s CEO Karandeep Anand is joining Disney in a newly created role as Senior Executive Vice President and Chief Technology Officer. Karan expects to be joined by members of Character’s technical team to build on Disney’s impressive technology capabilities to help connect fans worldwide with its beloved stories and characters in new and innovative ways.”
— https://blog.character.ai/the-next-chapter-of-entertainment-...
2 years in, the founders and 30 researchers took Google's $2.7b and left. Then they had to ban kids which was probably most of their userbase. Yet they were still putting $1m/mo on the corporate cards with 86 full time bay area employees on ~$278k average base, and almost $100k owed to DoorDash. lol
The extraction of value will be studied at business schools
> 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.
I wonder what will happen to all the very personal and sensitive data they (probably) have on users?
EDIT - glad to hear that Character.ai employees did not get screwed, at least per a comment below
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I worked at a company in 2000s that was acquired. I had no stock but the owner still gave a generous spot bonus and a years salary bonus retention package to employees. Owners got life changing wealth, employees got a down payment for a home.
It’s sad that this doesn’t seem to be the norm. Screwing employees on acquisition seems like a severe breach of social contract.
The FAQ says the chats continue to be protected under our Privacy Policy. Great. They’re selling all or substantially all of the assets though and for a companion app the chats are the asset. So who’s buying and does the privacy policy go with them?
A lot of money moved through different hands, yet it doesn’t seems that nothing of value was created.
I wonder how any of this makes sense.
Not familiar with the company. Home page says nothing other than a tag line and a signup to continue. About page does add very little. Their blog provides a little bit of insight, but honestly, I have no clue what they sell or what the value prop is.
Maybe I'm the clueless one, at it seems others are quite familiar with their story.
They're still hiring https://jobs.ashbyhq.com/character/ which makes absolutely no sense and I can only conclude these are zombie jobs
Never liked CHaracter.AI. They ran a bug bounty program before they were acquired.
I found multiple critical bugs (ability to access other user accounts without even having to guess or know the username) and they patched them, told me they were 'informative' and didn't pay me anything.
I think it's unfortunate that this is the case and that the service has been treated unfairly in many regards, but c.ai has faced specific problems that other businesses in the space don't, and the basic service isn't going to be marketed towards the more revenue-generating segments like enterprise without making something different out of it.
50067507 Character.ai files for bankruptcy, agrees to sell some assets for $20M https://www.reuters.com/legal/litigation/characterai-files-b...
50069942 Character.ai Files for Bankruptcy https://www.theverge.com/ai-artificial-intelligence/1009802/...
50071087 Disney Bids on Character.ai Assets as Chatbot Files for Chapter 11 Bankruptcy https://variety.com/2026/biz/news/disney-bids-on-character-a...
It was my impression that some of these companies are getting acquired for the data they collected, and $20M seems on the low-end nowadays, especially given the traffic they had.
So, is it that Disney isn't getting the data, is the data poor, or is it just not a data thing at all?
All the drama in here just because it's a gooning and role play toy.
From what I can tell it was a popular tool with many users, one of the more popular ones among MANY. There are thousands of users using tools like this. Nothing inherently bad about that.
Nothing wrong with some AI gooning IMO
5 days ago:
Character.AI chatbots encouraged users to cut and starve themselves, Kentucky alleges
https://www.reuters.com/legal/litigation/characterai-chatbot...
The careers page is still up and and sounds like a great place to work - build the future, create with purpose, collaborate with the best [1].
i dont know why this isn't getting much attention. Isn't this the fate of most ai chat services?
If this means their awful "service", which has caused so much harm, ends up closing down, the world will be a little bit better
It was always odd to me that talent like Noam Shazeer was working at a company with such a gimmicky premise to begin with.
The CEO and left a week ago. he must have been among the first to see this coming.
And nothing of value was lost...
(well, except investment money I guess)
Will this kick off a wave off bankruptcy of companies with morally bankrupt ideas?
Boom and bust cycle in startups is so short lately!
I had no idea there is a Morality Court
> What happens to user data and chats?
> Your information continues to be protected under our Privacy Policy, and our data privacy and security practices are unchanged.
Opens Privacy Policy
> 2. How We Use the Information We Collect
> …wall of text covering every use under the sun…
> 3. When We Disclose the Information We Collect
> …wall of text covering effectively anyone and any time…
Translation: yeah you agreed that your data can be sold, and it will be sold.
This service is the ground zero of AI psychosis and children talking to chatbots as if it's their friends/lovers.
I'm surprised Disney wants anything to do with it, then again, they wanted to integrate Sora into their streaming offering. Oh, how the mighty have fallen
Amongst all the professionals that I have worked in my 15 years, VCs are the least ethical people. They will do “anything” for money.
"maximize value" is the new "minimize loss"!
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You realize that the investors already got their exit after Google bought off the founders and some of their staff?
They knew it was going to $0, so the now the employees at this "employee owned" Character.ai got themselves scammed.
And so it begins.
For all intents and purposes Character.ai was acquired in August 2024, and this is just the mess leftover from their run around antitrust regulation.
The company filing for chapter 11 today is shell that was left after Google "hi-quired" (the opposite of acqui-hired) the founding team. The shareholders got paid ($2.7B from Google), the founding team moved on, and what's left is the corporate structure and whoever Google did not want.
It sucks for the people left over (but then again, it also sucks to be part of the team that's laid off in a merger). It's also a terrible practice that I hope the Justice department and the CFTC will put an end to soon.