Character.ai, the startup behind one of the largest AI companion applications, filed for Chapter 11 bankruptcy in the Delaware District bankruptcy court. The company stated that developing and growing its platform, which allows users to have conversations and roleplay with AI characters, became prohibitively expensive. Multiple lawsuits, including one from the state of Kentucky in January accusing the platform of preying on children, added to the financial burden. Disney entered into an agreement to acquire some of Character.ai’s intellectual property for $20 million. The company expects to continue operating during the sale process but the platform could ultimately be wound down.
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