FROM A $2.7B GOOGLE DEAL TO A $20M DISNEY FIRE SALE — THE CHATBOT SUED OVER TEEN SUICIDES IS BANKRUPT

Character Technologies, the company behind Character.AI, filed for Chapter 11 bankruptcy protection in Delaware on October 12, five years after its founding by former Google engineers Noam Shazeer and Daniel De Freitas. The filing listed estimated assets and liabilities each in the $50 million to $100 million range, and CEO Colin Adams cited significant legal, regulatory and operational headwinds.

Disney Worldwide Services is the stalking-horse bidder at $20 million for a non-exclusive perpetual licence to certain intellectual property and claims. That is a steep fall from August 2024, when Google paid about $2.7 billion to licence Character.AI's technology and bring its founders back to Google. The company, which faced lawsuits alleging its chatbots harmed teenagers including a wrongful-death suit over a 14-year-old's suicide and later banned minors from open-ended chats, said it will keep the platform running during the sale process, expected to close in late November or early December, and wind it down if no buyer will operate it.