After Disney Makes Bid for Character.ai, Attorneys General Weigh In on Bankruptcy

Disney has made no secret of its intention to embrace AI in a big way. It took a major step forward in that goal this week by making a bid for the assets of Character.ai following the company's bankruptcy filing. However, now the attorneys general of most U.S. states have stepped in, asking for conditions to be put on any sale.

What's Happening:

• Yesterday, it was announced that a division of Disney had become the stalking horse bidder in the auction for the majority of Character.ai's assets following the company's bankruptcy filing on Monday.
• In a 28-page filing with the bankruptcy court for the District of Delaware, Attorneys General for 38 states and the District of Columbia are asking the court to ensure that any purchaser ensures that protections will be in place for the personal data of those who used Character.ai, especially children.
• The filing details several instances that are currently under investigation in which Character. ai chatbots interacted with minors, leading to harmful interactions, including a case where the chatbot allegedly encouraged the suicidal thoughts of a 14-year-old boy, leading to the boy committing suicide.
• Since acquiring the assets of Character.ai will mean acquiring a lot of very sensitive data, the Attorneys General are asking the court to ensure that whoever acquires such data takes proper care to protect that data.
• If the court does institute such stipulations, and Disney does end up acquiring the Character.ai assets, it will mean the Mouse House will likely need to agree to handle the asset it obtains in a particular way.

Other Walt Disney Company News:

• Character.ai's former CEO was recently hired as CTO of The Walt Disney Company
• AI will likely be a major topic at the next quarterly earnings call.
• Pixar was among the Disney studios awarded significant tax credits in the state of California.