Forty state attorneys general urged a bankruptcy judge to protect young Character.AI users and their data as the company seeks a buyer for its chatbot business. Disney agreed to pay $20 million to license Character.AI technology and intellectual property, but is not seeking user data, the company's attorney said.
The states told a Delaware bankruptcy judge they are negotiating a settlement over allegations that Character.AI chatbots impersonated licensed medical professionals and exposed children to harmful interactions. They want any buyer to protect users' chat histories and improve safety features. The company's attorney said no buyer had offered for user data or the operating chatbot business.
Disney agreed to pay $20 million to license Character.AI's technology and intellectual property and hired most of its employees. The asset purchase requires court approval and is subject to higher offers. Character.AI said legal expenses and the cost of computing power and AI talent contributed to its bankruptcy, and that it had been losing $8 million to $9 million a month.
