Disney to absorb majority of Character.AI staff in bankruptcy asset deal
Following Character.AI's bankruptcy filing, Disney has agreed to hire roughly 60 employees from the defunct chatbot maker and acquire certain assets for $20 million.
The collapse of conversational AI startup Character.AI this week has opened a path for many of its staff members to join Disney. Karandeep Anand, who previously led Character.AI as CEO, now holds the position of Disney's inaugural Chief Technology Officer. The entertainment conglomerate had already committed to purchasing select assets from the company for $20 million, according to earlier announcements.
Court documents reviewed by Bloomberg provide additional specifics regarding the transaction. Disney intends to extend job offers to no fewer than 60 Character.AI workers—representing the bulk of its employee base—with an estimated $60 million in total yearly wages. According to the filing, the overwhelming majority of Character.AI staff who received Disney employment offers chose to accept them. The arrangement functions as a stalking horse bid, meaning competing bidders could potentially submit higher proposals.
Despite maintaining a "large and engaged user base," Character.AI struggled with mounting operational expenses alongside "potential litigation-related liabilities and regulatory engagement," the filing notes. The startup faced a lawsuit brought by the parent of a 14-year-old who claimed her child developed an unhealthy attachment to one of Character.AI's chatbots and subsequently took his own life. Additionally, the company has been subject to government inquiries concerning child protection issues.
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