AI startup with 12 million users faces bankruptcy: Why Character.AI failed to make money

AI chatbot platform Character.AI has filed for bankruptcy despite attracting roughly 12 million active users, highlighting the financial challenges of running consumer artificial intelligence services. The company has agreed to sell some of its assets for $20 million to Walt Disney as it seeks to resolve mounting legal claims and find a buyer to continue its operations.

Character Technologies, the US-based owner of Character.AI, filed for bankruptcy late on Monday. In court papers filed on Tuesday in Wilmington, Delaware, the…