Disney to hire the majority of bankrupt Character.AI’s staff

Character.AI, the startup known for its chatbots, filed for bankruptcy this week. For many of its employees, though, that means not a pink slip but a new employer: Disney.

The shape of the deal is coming into focus. Character.AI’s former chief executive, Karandeep Anand, recently became Disney’s first-ever chief technology officer, and the startup had earlier said the entertainment giant agreed to acquire some of its assets for $20 million.

Sixty offers

A legal filing spotted by Bloomberg fleshed out the terms. Disney committed to extending employment offers to at least 60 Character.AI employees — the majority of the workforce — with combined annual compensation estimated at $60 million. According to the filing, the “vast majority” of those offered jobs accepted them.

The catch: this is a stalking horse bid, meaning another company could still step forward with a higher offer before the process concludes.

Why Character.AI stumbled

Per the filing, despite a “large and engaged user base,” the startup was hobbled by high costs along with “potential litigation-related liabilities and regulatory engagement.”

That last phrase is pointed. The company was sued by the mother of a 14-year-old boy who, she said, became obsessed with one of Character.AI’s chatbots before taking his own life. It also faces government investigations over child-safety concerns.

So Character.AI’s fate is a peculiar one: the users remain, the business does not hold up, and the company’s chief asset — its people — passes into the fold of one of the world’s largest media conglomerates.

Source: TechCrunch