What this bankruptcy says about AI startups

The AI boom is seeing one of its first major busts, as Character.ai has filed for Chapter 11 bankruptcy protection while it searches for a buyer. Founded in 2021, Character.ai enables users to create customizable chatbots and interact with them, and by February 2025 claimed to…

Character.AI collected millions of users, making it a very appealing acquisition. Google took a unique route to "acquiring" it, hiring away its founders and licensing its technology. Now Character.AI is filing for bankruptcy. Here's what to know.