Character.ai will shut down if no buyer emerges, capping a fall from $2.7 billion Google deal to bankruptcy
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Character.ai has filed for bankruptcy and is currently up for sale, with a deadline to close the deal by early December 2026. If no buyer emerges, the AI chat platform will shut down completely, although services and subscriptions will remain active until that point. The company cites lawsuits regarding harm to children, regulatory pressure, and operational issues as primary causes for its collapse. One tragic incident involving a teenager's suicide was highlighted in the report. Meanwhile, Disney is acquiring certain assets for $20 million, including a non-exclusive technology license, with former Character.ai employees assisting in the transition. This downfall marks a significant reversal from a previous $2.7 billion deal with Google in 2024, which aimed to bring back co-founder Noam Shazeer. Shazeer had since left Google for OpenAI due to frustrations with compute bureaucracy, according to reports.
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