Disney will hire at least 60 Character.AI employees, the majority of the chatbot startup's workforce, following Character.AI's bankruptcy filing this week. The entertainment company agreed to pay approximately $60 million in annual compensation to these workers, according to a legal filing reviewed by Bloomberg.
Character.AI's former CEO Karandeep Anand joined Disney as its first Chief Technology Officer. Disney acquired some of Character.AI's assets for $20 million as part of the arrangement. The filing indicates the "vast majority" of Character.AI staff offered positions at Disney accepted them.
The deal operates as a stalking horse bid, meaning another company can still submit a higher offer during the bankruptcy process.
Character.AI cited high operating costs and "potential litigation-related liabilities and regulatory engagement" as reasons for its financial collapse. The startup faced a lawsuit from a mother whose 14-year-old son became obsessed with one of Character.AI's chatbots before taking his own life. Character.AI also faced government investigations over child safety concerns.
Disney's acquisition of Character.AI's team and assets signals the company's continued interest in AI technology and chatbot development, even as the startup market faces intensifying scrutiny over safety and legal liability. The deal preserves employment for most of Character.AI's workers while Disney absorbs their technical capabilities and existing product assets at a reduced price compared to what a functioning company might command.