AI company once pursued by Elon Musk’s xAI and Meta files for bankruptcy, may shut down

JUST IN: Character. ai, the chatbot startup once pursued by Elon Musk's xAI and Meta, has filed for Chapter 11 bankruptcy and may shut down, with a proposed asset auction led by Disney.

Character. ai has filed for Chapter 11 bankruptcy, and it may shut down for good.

This is the chatbot company millions of people used to talk to AI versions of anime characters, therapists, celebrities, you name it. You can see the app right here. Not long ago this was one of the hottest names in AI, the startup both Elon Musk's xAI and Meta were circling. When Musk and Zuckerberg both want your company, you're supposed to be set for life.

Instead, it's bankruptcy court. And the strangest twist is who's showing up at the auction. The proposed sale of its assets is reportedly being led by Disney. The Mouse, buying the wreckage of a chatbot empire.

So a company once chased by two of the biggest names in tech couldn't find a buyer until it was on the courthouse steps. In this AI market, being wanted and being worth it are two very different things.

This is Sara White, reporting for HIT.