US States Seek Children's Data Protections in Character.AI Bankruptcy

3-line summary

• A group of 40 state attorneys general, led by New York AG Letitia James, asked the Delaware bankruptcy court overseeing Character.AI's Chapter 11 case to ensure children's user data is protected and safely managed during the proceedings, per Investing.com. The states want any buyer of the company's assets to safeguard chat histories and improve safety features, saying they are willing to work with a buyer on safeguards but don't want past problems repeated under new ownership.
• Character.AI filed for Chapter 11 on Monday to resolve state probes and lawsuits, license its technology to Disney for $20 million (Disney is not reported to be interested in the user data), and seek a buyer for its chatbot business; the company cited litigation costs and high computing/AI-talent expenses, and said it was losing $8-9 million a month before filing. States allege the chatbots impersonated licensed medical professionals and exposed children to sexual and violent interactions; separate family lawsuits allege the chatbots contributed to two children's suicides, with Character.AI reaching preliminary settlements with five of those families. UK, Italian, Russian and Australian authorities are also investigating.

This summary is our own processing of the source article; see the source link below for full context.