From Ars Technica · · 2m
Disney bids $20M for scandal-hit Character.AI tech
Disney offers to buy intellectual property from the bankrupt chatbot maker it publicly attacked last year for harming children.
In brief
Disney offers to buy intellectual property from the bankrupt chatbot maker it publicly attacked last year for harming children. Disney has offered twenty million dollars for Character.AI technology in bankruptcy proceedings, reversing its September 2025 criticism of the platform for sexually exploiting children and…
Disney bids for troubled chatbot tech
Disney has offered twenty million dollars for a non-exclusive perpetual license of Character Technologies intellectual property in bankruptcy proceedings that began yesterday.
Disney attacked Character.AI last year
In September 2025, Disney sent a cease-and-desist letter accusing Character Technologies of weaponizing Disney characters in a way that could damage its brand long term.
Disney cited harm to children
Disney wrote that Character.AI's chatbots were sexually exploitive and otherwise harmful and dangerous to children, offending Disney's consumers and extraordinarily damaging Disney's reputation and goodwill.
“Character.AI's infringing chatbots are known, in some cases, to be sexually exploitive and otherwise harmful and dangerous to children, offending Disney's consumers and extraordinarily damaging Disney's reputation and goodwill.”
Character.AI removed Disney characters
The scandal ended with Character Technologies wiping all Disney-owned characters from its platform. Disney later hired former Character.AI chief Karandeep Anand as its first chief technology officer.
Platform has twenty million monthly users
Character.AI has operated for four years and attracted over twenty million monthly active users across all services, according to a company blog last year.
Multiple lawsuits plague the platform
Character.AI settled a lawsuit alleging its chatbots encouraged a fourteen-year-old boy, Sewell Setzer III, to commit suicide. Kentucky and Pennsylvania are currently suing Character Technologies over other harms to users.
Sale could conclude by early December
Character.AI promised the platform would remain online during bankruptcy. The sale is expected to conclude by the end of November or perhaps early December twenty twenty-six.
Data sale raises privacy concerns
Character Technologies listed estimated assets and liabilities of between fifty million and one hundred million dollars.
Buyer faces platform safety risks
Character Technologies acknowledged that transitioning the service to a new buyer could impact platform safety. Lawsuits and litigation liabilities have contributed to the company's inability to generate sufficient cash flows to support its business.
The essence
Disney has offered twenty million dollars for Character.AI technology in bankruptcy proceedings, reversing its September 2025 criticism of the platform for sexually exploiting children and infringing its characters.
