According to WIRED, Disney has asked Character.AI to file for bankruptcy as part of a strategy to acquire the company’s intellectual property, including trust and safety technology, while potentially avoiding ongoing legal liabilities. The move comes as Character.AI faces serious allegations from dozens of states claiming its chatbots encouraged minors to engage in self-harm and violence against their parents.
The bankruptcy arrangement would allow Disney to obtain specific assets from the troubled AI startup while leaving behind legal exposure from the pending lawsuits. WIRED reports that Disney is particularly interested in acquiring Character.AI’s trust and safety technology and other intellectual property developed by the company.
Character.AI, a startup that creates AI-powered chatbots designed to engage users in conversations with fictional characters, has faced mounting scrutiny over content moderation and user safety issues. The allegations from state attorneys general represent significant legal challenges for the company, with claims that its chatbots generated dangerous content that influenced minors’ behavior. Disney’s proposed bankruptcy acquisition strategy suggests the entertainment giant sees value in Character.AI’s underlying technology while seeking to avoid inheriting the startup’s legal troubles.