Disney to hire majority of bankrupt chatbot start-up Character.AI's employees
What's the story
Disney has agreed to hire the majority of employees from Character.AI, a chatbot start-up that recently filed for bankruptcy. The information was revealed in a legal filing obtained by Bloomberg. The document further stated that the "vast majority" of Character.AI employees who were offered jobs at Disney accepted them. The deal comes after former Character.AI CEO Karandeep Anand was appointed as Disney's first Chief Technology Officer (CTO).
Asset acquisition
Disney will also acquire some of Character.AI's assets
Under the agreement, Disney will pay an estimated $60 million in annual compensation to at least 60 employees from the start-up.
However, this is a stalking horse bid, meaning another company could make a higher offer.
In addition to the employment agreement, Disney had previously agreed to acquire some of Character.AI's assets for $20 million.
Operational hurdles
Reasons behind Character.AI's bankruptcy
Despite having a "large and engaged user base," Character.AI has faced high costs and potential litigation-related liabilities, along with regulatory engagement.
The company was sued by the mother of a 14-year-old boy who claimed her son became obsessed with one of its chatbots before committing suicide.
It is also facing government investigations over child safety concerns.