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This article addresses the regulatory implications of Character.AI's Chapter 11 filing, specifically focusing on how state Attorney General investigations into user privacy, child safety, and data handling will impact asset transfers to Disney. The core issue is not the underlying AI technology itself but the legal framework governing sensitive conversational data during corporate bankruptcy proceedings.
Now that Character.AI is going bankrupt, what happens to all of its users’ data?
New York Attorney General Letitia James revealed a years-long multi-state investigation against Character.AI as they now seek to require protections on consumer data sold through its bankruptcy proceeding. James is among 40 bipartisan AGs who filed a notice of interest in Character.AI's bankruptcy case "to put all parties on notice of the regulatory issues that will need to be addressed in any sale or transfer of the Debtor's business or assets." Character.AI announced Tuesday it was filing for Chapter 11 and selling some assets to Disney. But the AGs warn there could be serious risk involved in the transfer of the technology due to the "hi … Read the full story at The Verge.
is a senior policy reporter at The Verge, covering the intersection of Silicon Valley and Capitol Hill. She spent 5 years covering tech policy at CNBC, writing about antitrust, privacy, and content moderation reform. New York Attorney General Letitia James revealed a…
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