Character.AI remains online
Character.AI has been operating for four years and has a “large and engaged user base,” according to Character Technologies’ bankruptcy filing. Last year, a company blog reported that Character.AI attracted more than 20 million monthly active users across services.
For fans, a Disney acquisition could sound appealing, perhaps finally clarifying that the platform will survive its protracted legal troubles that have included settling a highly publicized lawsuit alleging that Character.AI chatbots encouraged a 14-year-old boy, Sewell Setzer III, to commit suicide. Additionally, two states are currently suing Character Technologies, alleging other damages to users. Kentucky claims the chatbots encouraged self-harm, while Pennsylvania claims the chatbots illegally posed as licensed doctors.
In a blog discussing the bankruptcy sale process, Character.AI assured users that the platform would remain online and accessible. Any ongoing subscriptions will continue to be charged unless services change to alter existing agreements, according to the blog.
If all goes as planned, the sale will conclude “in late November or perhaps early December 2026,” Character.AI said. And although the press release noted that the platform would have to close if no buyer wanted to take on the potential responsibilities of running it, Character.AI promised users that “we are focused on finding the best path forward for our platform and community.”
Bankruptcy Sale May Become More Incomplete
Beyond the technology Disney is considering, Character Technologies declined to comment on whether any sensitive data could be sold through the bankruptcy process. Beyond the $20 million Disney has offered, Character Technologies “listed estimated assets and liabilities of between $50 million and $100 million,” NBC News reported.
Its press release noted that the decision to file for bankruptcy was made to maximize shareholder value, while the blog only pointed to the privacy policy as a guarantee to users that no sensitive data would be shared outside the platform. That policy explains that information shared with Character.AI may be transferred during sales of company assets, including identifying information, voice data, and chat logs. The only protection the privacy policy offers regarding sensitive chats is a reminder to users that “sensitive personal information is not required or necessary to use the Services; please do not include any sensitive personal information in your interactions with us or the Services.” This seems to ignore studies that for years have shown that people are often willing and eager to reveal sensitive or personal information with a chatbot because they are not afraid of being judged.
