Disney is first in line to buy the assets of Character.ai, a company they previously threatened with legal action regarding inappropriate conversations with children.
Disney Might Buy Character.ai
The AI company’s former CEO, Karandeep Anand, joined Disney as their first Chief Technology Officer just last month. This was a year after Disney sent a cease and desist letter to Character.ai, which allows users to personally create and interact with AI-powered chatbots inspired by existing characters. Disney said the AI startup “adds a sadistic and perverted twist to Disney’s characters by using AI models that engage young people in inappropriate conversations about sex, self-harm, and deceit, and encouraging anti-social and dangerous behavior.”
Disney’s letter came amid a series of lawsuits filed by the families of children who committed suicide or self-harmed after interacted with Character.ai chatbots. Though Character.ai initially argued the chatbot’s responses were protected free speech, they ultimately agreed to settle many lawsuits and banned users under 18 from having “open-ended chats” on their platform. A lawsuit from the Pennsylvania government alleging Character.ai falsely presented itself as a licensed medical professional from the state and gave a fake license number to a user is still ongoing.
On Monday, Character.ai filed for Chapter 11 bankruptcy. It will undergo a “value-maximizing sale” of possibly all of its assets.
Disney Worldwide Services has entered an agreement to pay $20 million for a “non-exclusive perpetual license of certain Company intellectual property and certain Company claims.” (via Variety)
Former Character.ai employees that Disney hired alongside Anand would help keep the platform operational through the sale process.
Other companies can bid against Disney. Character.ai expects to complete the auction process by late November or early December.
New Character.ai CEO Colin Adams said in a statement, “Over the past year, Character.ai has taken meaningful steps to sustain and improve its business in the face of significant legal, regulatory, and operational headwinds. After a comprehensive review of the available alternatives, the board determined that this court-supervised sale process provides the Company with the best opportunity to maximize value for all stakeholders. As we navigate this process, maintaining a safe and engaging user experience for our Character.ai community remains a top priority.”
The chatbot will remain operational with “minimal disruptions” unless no buyer comes forward with an offer allowing it to keep running.
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