Character.AI, the once-buzzy chatbot startup that faced high-profile lawsuits over the deaths of minors, has declared bankruptcy.
Character.AI announced last night that it had entered a “voluntary Chapter 11 bankruptcy process” and is looking to sell the company in a court-supervised sale.
“Over the past year, we’ve taken meaningful steps to sustain and improve our business amid significant legal, regulatory, and operational headwinds,” Character.AI said in a blog post. “After a comprehensive review of our available alternatives, our board determined that this court-supervised sale process provides us with the best opportunity to maximize value for all of our stakeholders.”
Founded in November 2021 by then-ex-Googlers Noam Shazeer and Daniel de Freitas, Character.AI allowed users to openly chat with a sea of largely user-generated AI companion bots known as “Characters.” It became an early success story in the frothy AI market that emerged after OpenAI’s release of ChatGPT, garnering the backing of the Silicon Valley investing juggernaut a16z and, as of March 2023 — despite having no revenue — it was valued at more than a billion dollars. At the time, its founders spoke of the app in grandiose terms, arguing that the service would power the adoption of “personalized superintelligence.”
