Character.ai files for bankruptcy and faces shutdown without a buyer

AI chat platform Character.ai filed for bankruptcy on Oct 13, 2026, and is up for sale, with the deal expected to close by early December 2026; if no buyer emerges, the service will shut down, though the platform and subscriptions will remain active until then. Character.ai cites lawsuits over harm to children, regulatory pressure, and operational problems as reasons for its state. Disney is acquiring some assets for $20 million, including a perpetual, non-exclusive technology license, and former Character.ai employees who joined Disney last month with ex-CEO Karandeep Singh Anand will manage the transition. This follows a $2.7 billion Google deal in 2024, which was partly intended to bring back co-founder Noam Shazeer, who co-authored Google's Transformer paper, the foundation of major AI models.