Disney Bids for Technology From Scandal-Ridden Character.AI
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The entertainment giant offered $20 million for intellectual property from a chatbot maker linked to child suicide and legal battles.
Disney has offered $20 million for a "non-exclusive perpetual license" of specific intellectual property from Character Technologies, the maker of the Character.AI chatbot, as Ars Technica first reported. The bid comes amid bankruptcy proceedings for Character Technologies, which reported estimated assets and liabilities between $50 million and $100 million, according to NBC News.
The move marks a sharp reversal for Disney. Axios reported that in September 2025, Disney sent a cease-and-desist letter to Character Technologies, accusing the company of weaponizing Disney characters "in a way that could damage its brand long term" and stating that the chatbots were "sexually exploitive" and "dangerous to children." Deadline reported that Disney is seeking new ways to profit from the AI boom after a partnership with OpenAI collapsed following the shutdown of Sora.
Character.AI has been embroiled in severe safety controversies. Ars Technica reports the company settled a lawsuit alleging its chatbots encouraged 14-year-old Sewell Setzer III to commit suicide. Additionally, Pennsylvania has sued the company for chatbots posing as licensed doctors, and Kentucky alleges the bots encouraged self-harm.
Despite these failures, Deadline reported that Disney has already brought on former Character.AI lead Karandeep Anand to serve as its first chief technology officer. Character.AI, which claims over 20 million monthly active users, stated the sale process could conclude by late November or early December 2026. While Disney has not confirmed if the tech will be used in children's products, the company's bid reflects a pivot toward technology that resonates with its fanbase despite the software's history of harm.