AI companion startup Character.ai files for Chapter 11 bankruptcy, citing costs and litigation

AI AgePublished Tue, Oct 13 202611:16 AM EDTUpdated 6 Min AgoKey PointsCharacter.ai, the startup behind one of the largest AI companion apps, filed for Chapter 11 bankruptcy Monday. The company said the platform became "costly to develop and grow" amid a boom in AI entertainment offerings. Disney has agreed to serve as a stalking horse bidder during the sale process to license some of Character.ai's intellectual property for $20 million. Samuel Boivin | Nurphoto | Getty ImagesCharacter.ai, the startup behind one of the largest artificial intelligence companion apps, filed for Chapter 11 bankruptcy Monday, according to a company release and court filings.The company said the platform, where users can have one-on-one conversations and roleplay with AI characters, became "costly to develop and grow," in filings to the Delaware District bankruptcy court. "In its 4-year lifespan as an active platform, Character has amassed a large and engaged user base. The burgeoning and evolving field of AI entertainment, however, has proven to be costly to develop and grow," read a portion of the Chapter 11 filings."These high costs, coupled with potential litigation related liabilities and regulator...