Character.ai has initiated voluntary Chapter 11 bankruptcy
blog.character.aihttps://www.theverge.com/ai-artificial-intelligence/1009802/... https://techcrunch.com/2026/10/13/just-5-years-in-interactiv... https://www.reuters.com/legal/litigation/characterai-files-b... https://variety.com/2026/biz/news/disney-bids-on-character-a...
For all intents and purposes Character.ai was acquired in August 2024, and this is just the mess leftover from their run around antitrust regulation.
The company filing for chapter 11 today is shell that was left after Google "hi-quired" (the opposite of acqui-hired) the founding team. The shareholders got paid ($2.7B from Google), the founding team moved on, and what's left is the corporate structure and whoever Google did not want.
It sucks for the people left over (but then again, it also sucks to be part of the team that's laid off in a merger). It's also a terrible practice that I hope the Justice department and the CFTC will put an end to soon.
>It's also a terrible practice that I hope the Justice department and the CFTC will put an end to soon.
Laws aren't real till 2029, at least
Funny for you to assume that will change things in this regard, when historically that’s never been the case to any large degree.
I did say 'at least'
They did change when Biden came into office and they started actually doing antitrust.
It's silly or misleading to imply nothing has changed in this administration compared to the last one with regard to enforcement of laws and regulations. So many laws changed or ignored and regulatory agencies gutted, dropped, or silenced. The very next link on hn after this article for me is about the cftc being told not to investigate certain oil deals.
Please don't try to convince people to accept the current abuses of the system as inevitable or "both sides" when they clearly aren't.
This form of laissez faire capitalism looks equally prominent in Europe at the moment. The problem seems not tied to any particular administration, but rather a culture of the Neo-liberal ideology which is pervasive across the entire capital and the governing classes of the western world (probably even wider).
> Please don't try to convince people to accept the current abuses of the system as inevitable or "both sides" when they clearly aren't.
Please stop only waking up under a Republican administration, or even worse just under the administration of a wrestling valet game show host.
> clearly aren't.
"Oh, please" and "it's just so obvious." If it's so clear, you should have less trouble explaining it than other things. And that doesn't mean explaining the bad things that your enemies do in power, but explaining how your friends weren't doing those things and actively ending them when they were in power.
Clinton did the massive deregulation that defined this century. Obama didn't prosecute anyone for 2008 financial crimes*, let Citigroup pick his cabinet, bailed out the banks, and flooded the stock market with free cash. Biden is literally the Delaware credit card prevent student loans from being discharged in bankruptcy guy, he had great people in Kanter, Khan and Chopra and undermined and ignored them consistently while breaking a railroad strike.
All absolute dirtbags who did what Republicans could have never gotten away with, because partisans who pretend to care fall asleep when Democrats are in power. A lot of consulting firms and nonprofits get flooded with state cash when Democrats are in power, and don't when Republicans are in power (and vice versa.) Patronage is more powerful than ethics when it comes to the middle class.
[*] Or for a worldwide torture network, or the people who admitted destroying evidence of the worldwide torture network. Or for the intentional lies that began two Middle East wars.
Isn't the opposite of acqui-hired just... not acquired nor hired?
I think they mean rather than acqui-hire, acquiring in order to hire the team. They hired the team they wanted individually to specifically avoid acquiring this company.
So...poached, maybe?
Poaching is when one illegally hunts wildlife. People are not animals, and hiring them is not harming them. It is a terrible term to apply to human beings.
Words can have more than one meaning.
Might be too late to start gatekeeping this term
---
poach (verb) poached; poaching; poaches
Intransitive verb
1. To encroach upon, especially for the purpose of taking something.
2. To trespass for the purpose of stealing game; also, to take game or fish illegally.
Transitive verb
1. To trespass on.
2. a. To take (game or fish) by illegal methods.
Actually, it's a technique used to make eggs, and I understand that the eggs are perfectly fine with this usage of the term.
Do we know for a fact that Google isn't cooking these employees in simmering liquid?
But is silence really consent?
Most people know what poaching means without making that association. It’s a perfectly legitimate term across all forms of employment, in both negative and positive contexts.
Do we also need to retire ‘head hunting’, because it brings to mind cartoonishly outdated notions of savagery?
The recruiter person should sometimes dramatically proclaim "Off with your head!" to signify a head hunting success (to the poachee).
Reject modernity, embrace tradition.
People are, in fact, animals.
Gutted. Poached is a bad word for it which already describes a different thing that is a component of this thing. If you can combine "poach" and acquire in a witty way, go for it.
"Hi-quired," although not sonorous, is at least a new word for a specific thing, instead of a word for a closely related thing that would just confuse anyone who heard it. I might've just gone for "Hire-quired" because it's obvious what it means and it seems a little bit easier to say.
Ah, so they hired them.
I think the original meaning of hi-quired was hijacked-acquired, in the sense that the company was acquihired, all the critical talent transitioned to a more important G project and that's it.
So hi-quired means acquihired? Except its also the opposite of acquihired? This makes no sense to me.
it's people just trying to be smart here. You are either acquired (bought for mostly the product, whoever wants to leave is inconsequential), or acquihired (bought also to absorb the talent pool, so it is contingent on some personnel staying on).
All this other stuff people are trying to make up falls under those two when a company buys another.
I think the point is that it is an acquihire in purpose (want to team, not the assets) but would be blocked by the government so they did a thing that looks a LOT like an acquisition (paid off the shareholders, took the team) without technically being one specifically in order to avoid regulation. It's an "aquihire" in everything except name and the issue is that it was done in order to get around consumer protection laws. Google got what they wanted. The investors got what they wanted. The people got screwed.
Mike Levine (a financial blogger for Bloomberg) says the industry is calling these sorts of transactions "reverse acqui-hires" to distinguish them from a normal (forward) acquihire where the acquirer buys the whole company even if all it wants is the people. He discusses some of the advantages and legalities here:
https://news.bloomberglaw.com/mergers-and-acquisitions/matt-...
American DOJ and CFTC won't do anything about these kinds of situations.
> It sucks for the people left over
Not clear that this is true financially. Of course, it sucks to be at a sinking ship, but in most of these the people left behind are compensated as both employees and shareholders.
> compensated as [...] shareholders.
Don't all shares / options go to zero in Chapter 11, or is that only true in Chapter 7 when the lenders take over?
In any case, I'm not sure Character.ai's assets will be worth much or that the employees will have any sort of liquidation preference.
Equity holders have a more junior claim than debt holders, but if there are enough dollars in the bankrupt company to make the debt holders whole, the equity holders get whatever is left over (obviously in order of seniority).
They were likely paid out at the same time other investors were when Noam et al went to Google.
The fact that the legal entity has no money doesn't mean they didn't get paid.
You can figure out a bit about what likely happened by what is not happening. NVIDIA/Groq are being sued for leaving former employees out of the acquisition: https://www.cnbc.com/2026/10/05/nvidia-groq-deal-stockholder...
Which to me implies that in that case, at least current employees were taken care of, and the court will likely force the former employees to also be taken care of because Delaware law doesn't like it when you discriminate in ways that were not spelled out ahead of time.
> It's also a terrible practice that I hope the Justice department and the CFTC will put an end to soon.
How is hiring people "terrible practice"?
Going around consumer protection law is the claim for a terrible practice, obviously not "hiring people".
They probably didn't want to take on the legal risk of the entity, more than anything.
Any such ban would be in direct conflict with California law (where I assume Character.ai, as a company founded by Xooglers living in Palo Alto is based), under the same logic that forbids non-competes. California has created one of the most prosperous countries in the world under a framework where you actually have to entice your employees not to leave, rather than shackling them to their workstations, and I would be extremely opposed to any attempt to change that.
I don't think this is necessarily true. This wasn't purely hiring. They also licensed the technology and paid off the shareholders, which is why it's basically an acquisition in everything but name.
The problem is each step individually is important to allow companies to do, and follows as a nigh-irrefusable consequence of the previous. You can't ban companies from "poaching" employees, or you end up as an economic hellhole of indentured servants, like Florida, or New York. You can't ban the licensing of a companies technology, since we want innovators who don't necessarily have the opportunity to directly execute on their new technology to still innovate. And you can't ban paying the company for doing so, since that's the whole point.
Meanwhile, the way that plays out is that Google hires all the talent by fairly paying more than the startup can, then can turn around and say "your company is a dead man walking, you can either sell us your tech, or crash and burn with nothing", and the only fiscally responsible decision is to sell.
Which is why at the top end we are supposed to have complementary laws. Bans on non-compete increase competition at the low end. Antitrust and government regulation/licensing at the high end prevent monopiles and thereby increase competition. The problem today is that we are dropping the ball on the high end, letting the Googles stamp down competition when, in decades past, they would have been broken up.
You can ban a compound action. We have antitrust laws.
The rules aren't that simple. The combination should be considered holistically against antitrust law. It's a judgement call that ultimately comes down to a judge or jury.
Antitrust is also federal and is probably generally supreme over state law. E.g. even if Google fairly acquires talent according to state law, it can still be determined to violate antitrust.
This poaching scenario (where Big Co pays above market to a large number of employees to drive a competitor out of business) is very similar to dumping (selling goods below market etc.), which has been illegal for a long time even though "selling goods" is generally legal.
However, since the government (DoJ, FTC, etc.) is the ideal litigant, you actually need someone who works there to not get fired for long enough to complete investigation and enforcement. In a lot of anti-trust cases, all the direct participants benefit: the employees get paid more, Big Co consolidates power, and Small Co gets paid off. The "losers" are most distant like their customers or uninvolved competitors who aren't in a good position to sue.
I don't think banning these type of psuedo-acquisitions runs counter to non-competes. I posted the other day about Augment, which I believe did the same thing.
"if it walks like a duck and talks like a duck, it's probably a duck" should apply to acquisitions. These types of acquisitions leave employees (+ other shareholders) holding the bag. It should be illegal.
> California has created one of the most prosperous countries in the world...
Along with the rest of the top 5 states where almost everyone lives in the USA?
Have you ever even lived for a significant amount of time outside of California? Ever try New York, Texas, or Florida? Nobody is "shackled to their workstation" there either. California leads in unaffordable living and wealth inequality, and it's not even because those on top in California are living any better than even the upper middle class elsewhere.
The economy is much more than tech and most of those businesses are not in California and don't want to be.
character.ai - the tobacco company AI equivalent - who's business model it was to lull users in with highly-unstable AI 'friends', which was a bad idea from the start as most normal thinking people would assume, yet predatory VCs funded that shitshow and that far too long, and many scandals and even suicides followed from it that could have been avoided. Companies and their executives must be held personally accountable for knowingly detrimental effects on society and their users - that's the only way regulation for the benefit of users actually works.
It's a real disgrace that companies like Google and Disney acquired people from them - it displays those companies' true values and motives: profit at any fckin human prize.
Disney. You mean the company that hid an image of topless woman in The Rescuers (1977) movie and from which many child stars have gone off the rails in later life, main actor kissing a 11 old in Blank Check (1994), and the 2026 lawsuit by Raquel Lee Bolleau among other scandals that anyone as a parent would hope not to be there
The very same Disney that hired Brian Peck to work on The Suite Life of Zack & Cody immediately upon his release from prison after serving 16 months for sexually abusing Drake Bell while working on Drake & Josh at Nickelodeon.
That seems perfectly reasonable. In theory, someone being released from prison has paid for his crime and reformed his behavior (if not, that's a failing of the criminal justice system). In that case, he doesn't deserve further extrajudicial punishment like being unable to get a job, nor is it some kind of breach of morality to hire him.
> In theory, someone being released from prison has paid for his crime and reformed his behavior
There's no theory that says this.
> he doesn't deserve further extrajudicial punishment
1) You're explaining your own personal belief here and not referring to anything.
2) It is not extrajudicial punishment to not hire a child molester to work with children any more than it is extrajudicial punishment to not hire a bank robber to work at a bank.
> the company that hid an image of topless woman in The Rescuers (1977) movie
Disney is guilty of a lot of crap—everything else that you mentioned and much more—but that specific instance wasn’t their fault and they acted to correct it once they knew.
https://www.snopes.com/fact-check/the-rescuers-topless/
Again, I’m not here to defend Disney, they definitely are rotten, but we can point that out by listing all the things they definitely did badly and on purpose rather than leaning on dubious situations which weaken the argument.
These are thin wrappers over LLMs (specifically, C.AI’s proprietary models). Claiming they are equivalent to tobacco companies fails to understand and in fact minimizes the reality here. If you truly cared about child suicide and weren't just playing up an emotional role, you’d seek to learn how these situations came about.
LLMs are “yes men," and they will on average agree with you with enough arguing. Go chat with one about a fight you had or even make one up and watch as it soothes and supports you. In fact, I put my finished argument into an LLM and opened two different chats and spoke to it in both of our perspectives, and depending on who was prompting it, it claimed the prompter was “right”.
Now, with that in mind, consider the situation: a youth already feels depressed; they talk to the chatbot and, after enough talking, the chatbot is agreeing with them because that is the “probable” mix of tokens. This is platform-agnostic, because it is a fundamental aspect of LLMs. So any value judgment you apply to C.AI specifically must be forwarded to every company, because I have seen, heard, and even made custom roleplay cards with every vendor.
Suicides are unfortunate, but even if the LLMs had a role to play, there’s like what, one confirmed case for C.AI’s entire user base? Even if we assume that was only the “known” cases and assume that there are actually closer to 3000 out of their +30 million user base, then that’s basically the chance of being struck by lightning and is below the standard rate of suicide per the CDC.
There simply is not strong evidence that LLMs are likely to increase suicides, and while they can be a vector for those with underlying issues, so can anything else. People have committed suicide over cartoons, radio shows, books, TikTok trends, and losing game consoles, and certainly not to mention social media.
In short, the advent of LLM chatbots is not strongly correlated to an increased suicide risk, and instead it was an unfortunate situation sensationalized for the eyes of the public by the media. If you wish to push your outrage at anyone, do it at the people who profited off of the suicide and not the company that was picked apart in the process.
> "If you truly cared about child suicide" > "Suicides are unfortunate, but"
If you ever start sentences this way,
Stop, Delete your comment, and Step away from your computer.
Please, for the sake of everyone involved apply some critical thinking skills and read more thoroughly.
”Character.ai’s CEO Karandeep Anand is joining Disney in a newly created role as Senior Executive Vice President and Chief Technology Officer. Karan expects to be joined by members of Character’s technical team to build on Disney’s impressive technology capabilities to help connect fans worldwide with its beloved stories and characters in new and innovative ways.”
— https://blog.character.ai/the-next-chapter-of-entertainment-...
These people are playing on a completely different league
At least Anand has been in the business for like 30 years. I didn't know anything about him but I assumed he was a 25 year old from Stanford that VCs decided to shower money on
I'm imagining the horrors of character bots themed and named after popular disney characters at the expense of our youth. Dystopian stuff
Sets up the most vile company preying on lonely people, runs it into the ground - then gets hired to do the exact same thing for a bigger company. It’s a big club, and you ain’t in it
I can't even imagine what George would say today. I know things weren't great in the 80s, but this seems to be a whole new level of stupid.
He didn't really run it into the ground, this whole bankruptcy thing is just smoke and mirrors to cover the fact that Google basically acquired them ages ago
I understand the argument for protecting the children from the harms, but why should we have such arguments around “lonely people”? It’s just adults consuming media tailored to their needs. I can’t see it being worse than “IG/TikTok ruining an adult’s perception of reality”, or “Tinder focusing on return-users metrics”.
But again, I support the ban for children.
The part that’s insane to me is his company ripped off Disney IP then Disney hires him saying how much he loves and respects Disney.
Game respects game.
Character.ai (business model Uber for AI psychosis) takes near 3 billion bag and files for bankruptcy in a move to getting up with the best practices of the big boys of entertainment, as ex character ai ceo moves to Disney (business model: Uber for tax-deductible cultural vandalism and EULA-enforced manslaughter).
2 years in, the founders and 30 researchers took Google's $2.7b and left. Then they had to ban kids which was probably most of their userbase. Yet they were still putting $1m/mo on the corporate cards with 86 full time bay area employees on ~$278k average base, and almost $100k owed to DoorDash. lol
$100k in DoorDash is a lifestyle
Sometimes watching the fresh-faced punks make bank while I slave away at a "regular" company for average pay is just demoralizing. It's really about being at the right place, time, and near the right people, isn't it.
Its all about hacking companies and VCs - instead of hacking hard problems. Astra- give me the API of my society.. what do you mean Bearer Token..
Joining or starting a startup is a risk, many fail and leave the founders and early joiners with nothing. No risk, no reward.
Nothing except the $278k average base salary, while living luxuriously at work and probably home too on the startup's expense card, as the $100k door dash bill shows. I bet there were a ton of fancy off sites in Hawaii or wherever.
Meanwhile at $bigco I just got my request to buy a shitty $1k Dell laptop denied because I got one 2 years ago and I have to wait 1 more.
I remember the laptop renewal also was 3 years. Which would have been fine if they didn't have that policy to issue Dell Latitude, end of the barrel hardware Dell itself couldn't sell.
One day I figured nobody forces me to work for such company.
Elon is the richest person on earth and he doesn't seem particularly happy. Trump is the most powerful and hate-tweets himself to sleep every night. Zuckerberg seems to be his happiest doing sport and spending time with his family.
They were clearly in it for the investor perks and not the product, spending away like that.
If you want an unsustainable joyride, then you too can work for a startup headed for chapter 11 (like 8 out of 10 startups).
Also, knowing people in general has never not been valuable. It's arguably the main thing holding most engineers back from success. Plenty of evidence backs this up: Type fewer keys, press more palms.
A lot of that depends on how you do with the birth lottery. The path from Westchester to Stanford is a little easier than from a homeless shelter (that was MY life).
If the best advice to succeed at being an engineer is to do less engineering and do more schmoozing, then something is broken
While I understand and have shared that sentiment, this is a classic "is versus ought" trap. It ought to be the case that sheer technical skills can carry you. It is the case that they can't. This is generally true for just about every job in the human experience.
If nothing else, those human connections can be the difference in outcomes when you inevitably screw up. If you've invested in relationships, when you make a mistake, it's more likely someone will say "bluefirebrand means well, and I can see how their good intentions led to this outcome. Let's figure out how to fix this so it won't happen again to them or anyone else." If no one at work knows you except as the person who sits off to the side and never talks to their coworkers, the response may very well be "bluefirebrand who? Alright, let HR know we need to hire a replacement."
Again, it ought to be the case that none of that matters, and everyone is treated the same regardless of their personal network. But it is the case that this isn't how the world works, and it's not reasonable to wish it otherwise. I mean, are you as likely to help a stranger as a friend even if their needs are identical? Most people would say no.
You also have to be a total scumbag.
I'd argue that most people would easily pivot to "total scumbag" for 250k+ salary. Me included.
The thing is, if you were already in the crowd that gets offers to work at this sort of startup, you could be drawing the same 250k+ to work a normal 9-5 at a FAANG-adjacent
Signing on to a hookers-and-blow startup is a choice a lot of these folks made, not their only route to money
Correction: FAANG salaries are almost always better. You get a lot more equity with startups. It’s a gamble. You’re betting a short term paycut on the company’s success.
But the main reason I’d generally work at startups anyway is because it’s more fun. When something needs to be done, you can’t contact the department that does the thing. You are that department; go figure it out!
And yes, that’s also a lot more pressure, but I wouldn’t trade it for a 9-5 desk job. (Other people absolutely would, and do. I never criticize their decision making. That’s what’s right for them. It’s just not what’s right for me.)
> You get a lot more equity with startups. It’s a gamble. You’re betting a short term paycut on the company’s success.
Well, one used to get more equity. And maybe the first couple of people through the door still get more equity.
If you are engineer #5 or later at a startup today, I'm willing to bet the 5-year upside on a FAANG comp package is on par or higher with a decent startup exit...
Bullshit. I met a lot of my favorite people in the world working in startups, people I want to stay in contact with for life because they’re good and I enjoy being around them.
There are bad and good people everywhere. I’ve seen new fewer good people at small companies than large or non-tech ones.
Yes, yes, yes...
This is the way tech has always been. Or as Carlin said "It's a big club... And you ain't in it."
Occasionally, you can ride their coattails (there will always be rising tides), but if you don't have the right connections and the right degrees from the right universities, you're not invited to the box seat TLA titles of these things...
The odds are much better than state lotteries, and the payout is higher than the stock market, but most of us still need to do our own financial planning instead of socializing the risks of the founder class as they privatize the gains. And yet, each day I get these ludicrous emails from a16z about which startups started by which all star founders want to hire me for less than I make from passive revenue these days for bread crumbs of equity.
But the thing here is, who needs character.ai in an age of local models and cheap tokens from OpenAI and Anthropic (unless you're very naughty and not shaming, just noting)? High margin role play disrupted by cheap open weight models: how very Clayton Christensen.
The people making bank are those creating these startups.
Their startups get acquired, or they get acqui-hired because of the founders and core people, who in turn have some pedigree which send strong signals.
If you look at the pattern, it is roughly:
- Top ML/AI researchers from the past 10-15 years - Top ML/AI engineers from top labs or companies
Those above people were hired by FAANG companies or AI startups.
But most important of all, it isn't a overnight success. Many of these have been going at it for 10+ years now. Of course some are relatively young, as in having joined Anthropic or OpenAI more recently (past few years), and launching their own startup after 2022.
> It's really about being at the right place, time, and near the right people, isn't it
It's also about having the right moral flexibility. To be in this particular club, you have to hang out with some people that a bunch of us would really rather not be associated with...
The food industry should demand cash up front from the Silicon Valley grifters.
Normally I’m skeptical of this kind of schadenfreude, but if $1m/mo is a real number, that’s $11k per employee. I really hope they were running inference through the cards or something.
> Google spent over $2 billion to hire away much of the company’s talent, including co-founders Noam Shazeer and Daniel De Freitas, in 2024.
That's a long time ago. They should have been able to make a go of it in these hyped times.
That shouldn't have been a problem given that AI can fully replace talent. The whole company should in theory only have needed a dream and an Anthropic subscription.
WOAH, SOFTWARE ENGINEERING IS DEAD! BUY MORE TOKENS!
Now i hear that in gandalfs moria voice: "Full of a Toke! Next time throw yourself after it into the wishing well!"
Well one of those two names was a core contributor to the Attention paper, arguably the top contributor, before leaving Google to make Character Ai, no wonder the re-hired him back (before he left again).
Same thing they did with windsurf
how exactly did character.ai lose $2b in 2 years?
Sounds like this money went to individual employees/shareholders and not the company itself?
I wonder what will happen to all the very personal and sensitive data they (probably) have on users?
Probably auctioned off, like what happened to Spirit Airlines: https://news.bloomberglaw.com/bankruptcy-law/google-aims-to-...
It's unbelievable to me that this is legal. You put your trust into a corporate entity with your data. The entity goes away, so does the guarantee? Oh, OK.
I learned that the hard way with 23&Me.
> I learned that the hard way with 23&Me.
That's why I've never done a DNA test, it's not worth your literal biological data being sold off to god knows where to discriminate against you. I thought everyone realized this but didn't realize it was a niche opinion.
It would have been nice if my siblings had the same opinion.
Has that discrimination scenario ever happened?
Yes? https://www.law.georgetown.edu/privacy-technology-center/res...
That's not at all what was being discussed; that's DNA information collected by the government.
Yeah they'll buy 23 and me data too
I was asking for what had happened, not what you imagine could happen.
Buddy; governments move over decades and centuries, not minutes and hours. You cannot measure the effect of government action in the immediate like you want to.
The fact that the government is moving to collect these data as well as partner with third-party private industry (e.g., Palantir) to avoid direct data collection that runs counter to current/settled law, you have to begin to piece together the future.
Regardless of your apparent desire to avoid accountability for the US government's actions, potential or actual, these are truths for which the citizenry need to protect themselves against both by their own individual actions as well as the collective actions of their voting behaviors.
Dude they 100% do and have lmao that's not some hypothetical. People have been tracked down with 23 and me data by the feds.
I don't know if this is exactly the scenario you are thinking of, but the sections on Covid and Australia show real treatment or insurance decisions being made based on genetics. https://en.wikipedia.org/wiki/Genetic_discrimination
I hate to say it but fyi, don't give blood nowdays unless you read all the fine print they have an opt out policy you trust...
What are they doing when you give blood?
My original mortgage lender has a very functioning web portal to set up autopay and check my account.
They sold my mortgage to a big bank whose web portal and app are pure garbage. Constantly crashing, the autopay frequently just doesn’t autopay, and getting a statement history requires delving through a bunch of random menus.
It’s really obnoxious that I just get no say unless I refinance.
Imagine buying a bond that you are not allowed to sell, and just have to wait for maturity. You'd pay less than for a normal bond, right? Same goes for a mortgage lender. They would risk less and you'd be paying a lot more for such a loan, if you can find one.
This exact thing happened to me. Went from an extremely nice bill paying experience to a buggy crashing one.
> It's unbelievable to me that this is legal. You put your trust into a corporate entity with your data. The entity goes away, so does the guarantee? Oh, OK.
I agree it sucks but isn't that life? Jim makes you a promise, Jim dies, his kids don't have to keep Jim's promise, nor anyone else.
Mr Disney is long dead but we still can't cross the mouse.
> Google’s purchase doesn’t include personal data and privileged materials like Spirit’s 97.5 million passenger profiles or an estimated 50.2 million records related to the Free Spirit loyalty program data, according to court records.
It's the FUD spread by the AdTech industry (including here on HN by people who's salaries are dependent on invading our privacy) that is holding back sensible data protection laws in the USA.
It’s a company asset to auction off to the highest bidder now
EDIT - glad to hear that Character.ai employees did not get screwed, at least per a comment below
---
I worked at a company in 2000s that was acquired. I had no stock but the owner still gave a generous spot bonus and a years salary bonus retention package to employees. Owners got life changing wealth, employees got a down payment for a home.
It’s sad that this doesn’t seem to be the norm. Screwing employees on acquisition seems like a severe breach of social contract.
What are you talking about? I was an employee in 2024 and I was not “screwed”. My options were converted into cash at the same valuation that Google paid (vesting schedule remained intact though). Noam did right by his employees.
I stand corrected, I'm glad to hear that.
I had the same thing happen. Twice, actually - after the non-competes expired for the first acquisition, of course I accepted a position working for the same guy at the next company. Another successful exit there. These were small time, meat and potatoes type startup companies. Nothing fancy. The one thing I did post about here on HN, which I think was one 1) ahead of its time, 2) lacked investor connections, 3) we went with Oakland instead of SF DID flame out spectacularly. My part was the money from the first acquisition plus about 40% of my savings. Ah well. Gotta try it a few times. (still looking for the next opportunity)
All the drama in here just because it's a gooning and role play toy.
From what I can tell it was a popular tool with many users, one of the more popular ones among MANY. There are thousands of users using tools like this. Nothing inherently bad about that.
Nothing wrong with some AI gooning IMO
It seems like a bad way to get ai psychosis from personifying a LLM too hard. Keep your roleplay organic and find some friendly partners maybe
As if it's hard to find people, especially perverts, to roleplay with online if that's what you really want to do...
Yeah I find it really creepy how obsessed people like altman are at preventing users from having any sort of adult conversation. It's like living under shariah law.
Why does it matter if people want the chatbot to write sex stories? Who does that harm? It's not immoral or illegal. These same people are fine with going to the island, but ask a chatbot about sex and they'll hang you in the square.
"It's like living under shariah law". You're having sex with a robot bro. People are going to find you weird.
You're not really helping answer the core question here: Why must subjective "weirdness" be censored? Who cares if it's "weird"? People are allowed to be weird, regardless of your personal feelings about it.
When we normalize corporations deciding in what ways we are allowed to be "weird", we just accept corporations forcing us into conformity with whatever they happen to consider "normal", and so far these companies don't have a great track record of drawing that line.
I don't necessarily support banning it, but I don't think it's been all positives from how easy to access adult content has become over the years.
Not familiar with the company. Home page says nothing other than a tag line and a signup to continue. About page does add very little. Their blog provides a little bit of insight, but honestly, I have no clue what they sell or what the value prop is.
Maybe I'm the clueless one, at it seems others are quite familiar with their story.
Anthropomorphized AI character creation, in one line. Rather icky in my opinion; has led to suicides[0].
[0] https://eu.usatoday.com/story/life/health-wellness/2025/10/2...
Same for me, didn‘t know the company and the website says absolutely nothing about what they do. Wikipedia helped me; it‘s an AI chat bot service where you can interact with customizable characters.
Check their Reddit. Their userbase is rabid and has a casual relationship with reality. I checked a few random posts and there were people talking about how their life was over or how character.ai was the only thing that worked for therapy.
Honestly I’d be glad if this type of product disappeared, it’s just predatory on people primed for ai psychosis
It was my impression that some of these companies are getting acquired for the data they collected, and $20M seems on the low-end nowadays, especially given the traffic they had.
So, is it that Disney isn't getting the data, is the data poor, or is it just not a data thing at all?
A lot of money moved through different hands, yet it doesn’t seems that nothing of value was created.
I wonder how any of this makes sense.
This seems reductive. Character.ai has > 20 million monthly active users, and a lot of company valuation happens on the basis of user count (which is legitimate, that's not vaporware)
I disagree that it's reductive. If each user costs more in API tokens then your company isn't valuable. That's what everyone's been screaming from the rooftops about there being a bubble. We certainly use tons of AI at the company I work for, if we were paying full API prices then I would bet we'd be barely using it.
There's always enterprise wheeling and dealing to keep something discounted, but enterprises are absolutely paying API prices for tokens. For AI coding a least, the issue is more about attributing tokens to a real backlog (no leeching tokens for side projects) and keeping things from running away, both of which all the major AI coding platforms offer solutions for.
I have the impression that if MAU by itself was sufficient, the company wouldn’t have had to file for bankruptcy.
Obviously the company failed to convert its MAU into paying users, despite the fact the token costs greatly declined over the last years.
Why don't they just not count token costs at all (or any other cost-per-user) and only look at profits, like what Anthropic is doing to figure out if they're profitable?
As we saw after the hero Zelenskyy took down Yandex data centers, user count seems to be vaporware in many cases.
I'm seeing this repeated a lot, but I'm rarely seeing the evidence to back it up. Presumably you're not speaking about Yandex's search engine crawlers here, right?
In an internet full of metrics and graphs, it's odd that nobody's bringing anything to the table and is just repeating the meme. A bit bottish in itself, tbh.
If it turned out "usercount was vapourware" due to 3 Russian data centres getting btfo, I think there'd have been a global financial crisis underway as we speak.
I don't see any connection to Character.ai, but it's pretty obvious that Twitter is 90% bots, politically leaning heavily in same direction as Twitter's owner, whose pro-Trump interests are aligned with those of Russia.
Where all all these bots being hosted? I have no idea, but it certainly would not be surprising to find many of them coming from Russia (Yandex). Twitter must at least know the IP addressees of these bot accounts, but does nothing to stop them. Perhaps they are actually run by Musk not Putin, who makes no attempt to hide his attempt to use his position to subvert American democracy.
webvan and pets.com have entered the chat.
Did pets.com really have 20 million monthly active users? What were they using it for?
A drug dealer at the corner also has lots of active monthly users.
Not 20 million he doesn't
Get with the program, numbers go up = ai valuable. Don't look any closer, details are the AI's problem now.
welcome to the world of VC startups
the rich in society (corps, individuals) are so absurdly rich that they can keep throwing money till something sticks with almost 0 risk. If you believe AI is something civilizationally transformational which it is resonable to believe, then why not throw some money at it.
Have you peeked at how the (very complicated) financial markets work?
Lot's of people staring at computers moving money and ious around complicated networks within complicated rules making money making money making money.
Really progressing humanity forward :/
Replace the people with LLMs and we're well on our way to immanentizing the "Vile Offspring" of Stross's Accelerando.
>Really progressing humanity forward :/
You're using amazing technology funded through those financial processes to complain that those financial processes aren't progressing humanity forward lol. Modern AI is the perfect example of how financial systems are important for technological progression.
Thinking complex financial systems aren't contributing to humanity's progress because you don't recognize how it is used to fundamentally support the work that progresses humanity is like thinking taxes are a scam because you don't recognize how much you actually benefit from taxes everyday.
It's sad that you are being downvoted, for what you say it's pretty correct.
A lot of people don't understand the reason why financial markets were created and why they continue to exist.
There's a really good book called "Against the Gods, the remarkable history of Risk" which gives a good account on an aspect of why financial markets exist.
Basically, parts of society want to advance things (technology, arts, medicine, etc) but that same part doesn't have to carry the risk of doing their project. Financial markets are there to transfer the risk to people willing [able] to take on it.
Credit and Risk are two tools that have influenced the progress of civilization so much, its crazy.
Sure, there are people that abuse financial markets, the same way there are abusive people in Tech, Arts, or any other human endeavor. But that should not disqualify the whole system.
A valuable company wasn't created in the end, but all kinds of value spewed out of this endeavor. The co-founders almost certainly walked away filthy rich. A few hundred people got 6-figure paychecks. A few early investors probably made a profit selling to greater fools.
It is rumored that their last round valued them at $6B.
accrete means grow or make larger/greater; this is the opposite were a bunch of value moved around, some was lost (from an efficiency / opportunity cost perspective) and a bunch was concentrated into the hands of a few. That's not value growth.
True, I meant to say value was ejected from this i.e. there were some peripheral winners. I had a totally wrong definition in my mind of the word "accrete" (I was linking it to accretion discs around black holes).
It seems like a lot of people enjoyed using the product. Isn't that value?
Not when the product creates psychosis in people and makes them lonelier and sadder than before and encourages them to starve and cut themselves. Where is the value in this? https://www.reuters.com/legal/litigation/characterai-chatbot...
It's a roleplay app, an AI version of the old RP forums, or RP private chats. Anyone sane and slightly mature understands they're not being encouraged to do anything IRL. The main problem I see here is a lack of parenting.
But lot of numbers went up. And that mean lot of other numbers went up. Which means "wealth" for many went up. And they got bonuses paid.
The US just has a lot of venture capital money running around. It's common for biotech companies to raise about as much as Character.ai (although typically at lower valuations) and then never end up launching a successful product. From a societal perspective, it's valuable to be able to search the space of long shots; from a funder's perspective, the rewards of a good investment are high enough to pay for a lot of bad ones.
50067507 Character.ai files for bankruptcy, agrees to sell some assets for $20M https://www.reuters.com/legal/litigation/characterai-files-b...
50069942 Character.ai Files for Bankruptcy https://www.theverge.com/ai-artificial-intelligence/1009802/...
50071087 Disney Bids on Character.ai Assets as Chatbot Files for Chapter 11 Bankruptcy https://variety.com/2026/biz/news/disney-bids-on-character-a...
So many job openings for a company going under.
https://jobs.ashbyhq.com/character/
It reads like they didn't go under yet, they just expected to with the way the legal challenges were going. As part of that, Disney seems to hope to be taking a good portion (all?) of the employees in the sale. Without keeping staffing up, the sale might not have been viable. If they didn't have such an exit plan involving the employees still being around then it might have made more sense to freeze hiring and ride it out until the end or whatever option would make sense in that story.
They aren't under yet.
Keeping jobs up after filing for chapter 11 seems irresponsible though.
Seems fine so long as they are really transitioning those roles to Disney as part of the Chapter 11. Not sure if they are or aren't for each of those listings - if you are that'd be interesting to hear.
I've been at a company that went through Chapter 11 and still work with (at the new place) a few folks hired during that time.
Removing their fake job postings is low on the priority list. Same with the other companies and their fake job postings...
I think it's unfortunate that this is the case and that the service has been treated unfairly in many regards, but c.ai has faced specific problems that other businesses in the space don't, and the basic service isn't going to be marketed towards the more revenue-generating segments like enterprise without making something different out of it.
What were those specific problems they faced? I haven't paid any attention the market for cloud-based AI services by all these non-frontier companies, but I know it's a big market
I have never used it but the reputation it has in my bubble is that kids just used it to goon to Disney characters
So the problem is your customers don’t pay for anything and your content is unlicensed
I heard about various lawsuits, including one where apparently Pennsylvania alleges that a literal AI character has claimed to be a licensed psychiatrist inside of a chat, after the user asked.
It sounds ridiculous to me.
Mostly playing devil’s advocate here but if the McDonald’s app glitched and showed a popup claiming to be a licensed psychiatrist I don’t think they would be liable for the consequences for any self harm that happened to me because it’s unreasonable.
Not my best wording for the metaphor but why would a company specialized in creating fictional personas for individual users be liable if their fictional personas pretended they had real advice.
Aka how is this different than telling the doctors and the police that a horse told you that you would be hexed if you didn’t try and rob the store?
5 days ago:
Character.AI chatbots encouraged users to cut and starve themselves, Kentucky alleges
https://www.reuters.com/legal/litigation/characterai-chatbot...
Agreed, IMHO this might be the real reason.
The careers page is still up and and sounds like a great place to work - build the future, create with purpose, collaborate with the best [1].
[1] https://character.ai/careers
Either didnt remove yet or ghost jobs like many others nowadays.
i dont know why this isn't getting much attention. Isn't this the fate of most ai chat services?
Outside of being acquired, this is the exit
If this means their awful "service", which has caused so much harm, ends up closing down, the world will be a little bit better
There are probably dozens of clones because it's just an LLM wrapper at the end of the day.
It was always odd to me that talent like Noam Shazeer was working at a company with such a gimmicky premise to begin with.
Well, he founded it!
Huh. Idk if that makes it more or less strange. Post GPT-3 and he thought the future of AI was an artificial version of Cameo.
Sometimes talent decides to just make money and scam people into thinking talking with AI versions of celebrities as something worthwhile and positive for the world.
The CEO and left a week ago. he must have been among the first to see this coming.
Related: https://news.ycombinator.com/item?id=50069942
And nothing of value was lost...
(well, except investment money I guess)
They have no investors, afaik
Will this kick off a wave off bankruptcy of companies with morally bankrupt ideas?
I had no idea there is a Morality Court
Boom and bust cycle in startups is so short lately!
> What happens to user data and chats?
> Your information continues to be protected under our Privacy Policy, and our data privacy and security practices are unchanged.
Opens Privacy Policy
> 2. How We Use the Information We Collect
> …wall of text covering every use under the sun…
> 3. When We Disclose the Information We Collect
> …wall of text covering effectively anyone and any time…
Translation: yeah you agreed that your data can be sold, and it will be sold.
This service is the ground zero of AI psychosis and children talking to chatbots as if it's their friends/lovers.
I'm surprised Disney wants anything to do with it, then again, they wanted to integrate Sora into their streaming offering. Oh, how the mighty have fallen
Amongst all the professionals that I have worked in my 15 years, VCs are the least ethical people. They will do “anything” for money.
"maximize value" is the new "minimize loss"!
You realize that the investors already got their exit after Google bought off the founders and some of their staff?
They knew it was going to $0, so the now the employees at this "employee owned" Character.ai got themselves scammed.
And so it begins.