Disney uses Character.AI bankruptcy to dodge lawsuits and acquire AI tech
disney hires character.ai staff and acquires tech via bankruptcy deal, avoiding startup's legal liabilities. this impacts ai industry's approach to mergers and acquisitions.
disney structured a deal with character.ai that involved the startup declaring bankruptcy, allowing disney to hire most of character.ai's staff, including its former ceo karandeep anand, and potentially acquire character.ai's technology. character.ai faced multiple lawsuits and investigations over its chatbots' safety, with some states alleging they encouraged minors to self-harm. disney paid $5.5m and a $2m deposit to character.ai, and agreed to pay an additional $12.5m if it is chosen as the winning bidder for character.ai's assets. the deal allows disney to avoid character.ai's legal liabilities, which will be retained by the remnants of the startup.