Character.ai has filed for bankruptcy and is up for sale, with no buyer risking shutdown by early December 2026. The platform and subscriptions will continue running until then. The company blames lawsuits over harm to children, regulatory pressure, and operational issues for its financial troubles.
One teenager took his own life, prompting legal action against the company. Disney is acquiring some assets for $20 million, including a perpetual, non-exclusive technology license. Former Character.ai employees who moved to Disney last month with ex-CEO Karandeep Singh Anand will help manage the transition.
"Google closed a $2.7 billion deal in 2024 partly to bring back co-founder Noam Shazeer, who co-authored Google's Transformer paper," said a source. Shazeer and co-founder Daniel De Freitas were supposed to improve Google's reasoning models.
The announcement follows Shazeer's departure for OpenAI, reportedly over Google's compute bureaucracy, according to the Wall Street Journal. The company did not say whether it would continue operations if no buyer emerges, and the future of its service remains uncertain.
Source: thedecoder
