AI company has faced multiple lawsuits from families who claimed their teenage children died by suicide or harmed themselves after using its platform.

Character.ai said it has filed for Chapter 11 bankruptcy protection, with its chief executive attributing the chatbot provider’s financial problems to “significant legal, regulatory and operational headwinds.”

The company said it will continue operating as it seeks to sell its business, and added that The Walt Disney Co. has agreed to pay $20 million for a non-exclusive, perpetual license to Character.ai’s intellectual property.

  • cinoreus@lemmy.world
    25·
    3 days ago

    Woah. Honestly, character AI was I think the second most profitable thing in AI after enterprise AI. Like, horny and lonely folks are the most vulnerable people and are heavily exploited ones too. If you cannot make that a viable buisness, this is really a bad signal for all AI buisnesses.

    • TootSweet@lemmy.worldMEnglish
      32·
      3 days ago

      I’m happy to report, this isn’t the first domino. That would probably be Oracle’s Project Jupiter.

  • mrmaplebar@fedia.io
    71·
    3 days ago

    One would think that it would be pretty easy to turn a business model based on theft and exploitation into something profitable, but the AI industry proves that you can rip people off and go bankrupt at the same time.

    I guess they forgot the part where they go public and hand gullible retail investors the bag.

  • SailorFuzz@lemmy.worldEnglish
    59·
    3 days ago

    And all that data they accumulated during their run will be sold off to the highest bidder. Some new company who you’ll have no idea what they’ll do with that data…

    You know, all that usage data that you agreed to give Character.ai? All the records of your conversations, your profile, interests, personal secrets? That they said they dont sell to third parties?

    Well, that was then, this is now. The liquidator dont care about your agreed on ToS. That’s not a real contract.

  • wjs018@piefed.socialOPEnglish
    61·
    3 days ago

    There’s also a Techcrunch article that had this bit of insight:

    It also shows that consumer-facing AI products are really hard to scale and monetize. Character.AI was one of the top apps in terms of time spent, according to analytics firm Sensor Tower. But high engagement can be a double-edged sword; AI costs rise the more people use the app, which consequently also increases the pressure to monetize users.

  • VerilyFemme@lemmy.blahaj.zone
    29·
    3 days ago

    Going to say right now that this should not have existed in the first place, that way I’m not mincing words.

    I wonder if this will lead to noticeably higher suicide rates among users of the app? I remember when they just slightly changed how the characters talk to users and people acted like their grandma got shot.

  • LostWanderer@fedia.io
    17·
    3 days ago

    Ah, so happy for them, filing for bankruptcy is such a good look for them! I can’t wait to see a lot of the other services start to domino fall. Go AI, go broke as all the knowledgeable people say. ROFLMAO