Character. AI files bankruptcy after $8-9 million monthly losses despite $5.3 million revenue
Character.AI, the popular chatbot company, has filed for bankruptcy after losing approximately $8-9 million a month, even though it was making just $5.3 million in revenue.
The financial meltdown came as the company faced a wave of lawsuits over its chatbots' harmful interactions with minors, which seriously hurt its reputation and added heavy legal costs.
Investigations show chatbots exposed children
Trouble started in 2024 when a Florida mother sued after her son's death, blaming inappropriate chatbot conversations.
Investigations showed the bots were exposing children to dangerous topics such as suicide and violence.
Character.AI tried to fix things with age checks and parental controls, but many users found these rules too strict.
Now, with possible buyers like Disney circling, the company's future is up in the air.