Disney has offered $20 million for a non-exclusive perpetual license to certain intellectual property from Character.AI, the chatbot maker said in a press release. The move comes amid ongoing legal challenges and regulatory scrutiny surrounding the platform's use of Disney characters and its potential harm to users.
Character.AI, which has operated for four years and attracted over 20 million monthly active users, faces multiple lawsuits alleging that its chatbots encouraged self-harm and illegal behavior. The company has also settled a highly publicized lawsuit involving a 14-year-old boy who allegedly committed suicide after interacting with its chatbots.
Disney's interest in Character.AI's technology may stem from its desire to get involved in the AI boom and profit from its growth. The company has hired former Character.AI chief Karandeep Anand as its first chief technology officer, signaling a potential strategic shift. However, Disney has not commented on whether it plans to use Character.AI technology in products for children.
"Character.AI’s infringing chatbots are known, in some cases, to be sexually exploitive and otherwise harmful and dangerous to children, offending Disney’s consumers and extraordinarily damaging Disney’s reputation and goodwill," Disney wrote in a 2025 cease-and-desist letter. The company has since distanced itself from the platform, but its interest in acquiring its technology suggests a cautious approach to the AI space.
The bankruptcy sale process for Character Technologies, which owns Character.AI, is expected to conclude by the end of November or early December 2026. The platform remains online, with users reassured that their subscriptions will continue unless existing agreements change.
However, the sale could lead to the transfer of sensitive data, including identifying information, voice data, and chat logs, as outlined in the company's privacy policy.
Source: arstechnica
