r/pcmasterrace • u/Suspicious-Map-639 • 1d ago
News/Article AI companion startup Character.ai files for Chapter 11 bankruptcy, citing costs and litigation
https://www.cnbc.com/amp/2026/10/13/character-ai-chapter-11-disney-bid.html626
u/JKLopz 11 | 9060XT 16GB |Ryzen 5 5500 | 32GB DDR4 1d ago
Good, kids where building unhealthy parasocial relationships with the AIs there. They should have been closed a long time ago.
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u/ItsTheSlime 1d ago
Ive got some bad news for you about the new alternatives that are honestly considerably worse.
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u/kociol21 1d ago
This, most people in this thread don't know what they are talking about. "Bubble popping". CAI was one of the first services in this niche. It's a pretty small niche. They never really improved so they got stale in a field where everything is moving really fast. Most of their userbase were gooners and they got pressured by payment processors to block anything violent and sexual, so cut exactly the main part of their appeal. Their plans, models and whole service was utter dogshit. A LOT of better alternatives emerged. I predict the same stuff will happen to JanitorAI pretty soon. This is not bubble popping, this is one shitty service that refused to improve and alienated their core customer base, getting deprecated by competition.
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u/Nervous_Anxiety_3686 1d ago
>It's a pretty small niche.
I have bad news for you..
There's hundreds of millions of people using AI this way worldwide. Character AI alone has 12 million currently active users with over 160 million unique users that have used it. A concerning number of people use chatgpt this way. It's not confined to any age group, any gender, or nation. People across the world are using AI for romantic 'companionship' in droves.
https://www.npr.org/2025/10/08/nx-s1-5561981/ai-students-schools-teachers
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u/paranoidgirl3 1d ago
I think a lot of people fundamentally misunderstand what people are actually using this sort of service for. There definitely are people entering into relationships with what is essentially just a dnd style character sheet, but I imagine the vast majority of users don't actually fall into that.
The reality is weirder. These services offer limitless roleplay in which you are essentially God. Its playing pretend, but its not some fantasy stuck in your head. It is a fantasy that you can live in through the text on your screen.
You dont even need to be a good writer to enjoy it. Obviously all you end up creating is cringey slop, but its perfectly tailored to you and thats all that it needs to be. It is a very potent form of escapism.
Again, there definitely are people out there falling in love with their workstations and personal assistants, but people go to these LLM roleplay websites to do just that. Roleplay. Most users are probably cycling through different characters like toy dolls, rather than falling in love with them. What they are falling in love with instead is the ability to escape into their own fantasies.
While falling in love with an LLM is objectively neither better nor worse than using an LLM to craft some sort of masturbatory dream space, it is certainly more neurotic.
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u/DonaldTrumpsScrotum 1d ago
I’m still blown away at how much processing someone can do one JanitorAI completely for free. My sister is addicted to the thing and as far as I know, has not spent a dime on it. Their revenue must be tragic
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u/SoigneBest 1d ago
Disney is trying to buy the technology
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u/Nunulu 1d ago
wow so they want kids to grow up into high quality adults without any mental health issues by giving them AI "friends" who are always there for them 24/7, positive, cannot be exploited, very knowledgeable, and nothing could go wrong /s
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u/Medium_Notice_3512 17h ago
They raised an entire generation of furries do you think AI will be too much for them?
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u/ButterflyOk6375 13h ago
honestly, I am a kid, and i wasn't using it for character rpgs, but like war rpgs and being in charge of a nation stuff, rather then 1 on 1 chats.
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u/GlobalCurry 1d ago
Rock N Roll music makes kids worship the devil and violent video games make them shoot up their schools too.
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u/ericrobertshair 1d ago edited 1d ago
Guns dont kill people, rappers do, I saw it in a documentary on BBC2
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u/Aries_cz i7-14700 | 48GB RAM |RTX 4070Ti Super 23h ago
Guns dont kill people
Obligatory Jon Lajoie plug https://www.youtube.com/watch?v=xC03hmS1Brk
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u/fiero-fire 1d ago
I don't even know if we can call a relationship with a chat bot parasocial. It's somehow less social than parasocial relationships
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u/Demonikaaaaa Ryzen 7 260 | 5070 mobile | 64GB DDR5 16h ago
There might be a reason as to why this even happened in the first place, and it aint pretty.
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u/Appropriate-Shake875 21h ago
How about instead of blaming the company you hold parents responsible for neglecting their kids mental health and safety? Why should the rest of society who have self control lose out on something just cause some sad excuses for parents can't be bothered to do the bare minimum?
The parents buy the kids their devices and make ZERO attempt 90% of the time to even try to control and monitor their kids internet usage, not even attempting to use parental controls or block their kids access when they see the kid spiralling or misusing the site
(like the woman who knew her kid was editing cai messages to bypass censors, knew her son was spiraling, bounced him between therapists cause she didn't like the diagnosis, and at most would take his phone from him for a week but leave him his laptop, never blocked his access to the site and instead paid for his premium, then left him alone at home with a gun he knew the location of and could access) and a lot of them use the excuse of it being pointless cause "not all kids are dumb and they'll just find a way around it" cause they can't even fathom disciplining their child for intentionally going out of their way to violate established rules.
Your kid is your burden, the rest of the world isn't a playground and it's you're responsibility to protect and care for them. The Internet is not a daycare nor should it be made into one just cause some parents can't be bothered to do the bare minimum.
The fact of the matter is if you neglect your child's physical safety you get in trouble, you neglect their physical health and you get in trouble, your child kills someone and you get in trouble. But apparently you can neglect your kids mental and emotional health, neglect their online safety (look at the dozens of kids who talk to strangers and get lured into meeting them), and as long as your kids only kills themselves you get to pretend you're a victim when in reality your kid is the victim and their death is a consequence of your incompetence and inability to do the bare minimum parenting and it's total BS.
Parents need to be held responsible for neglecting their kids mental health and online safety, if a kid offs themselves the parents need to be investigated and if it's evident that it could have been prevented if the parent had done even the bare minimum the parent needs to face consequences just as they would have if their kid shot up a public place.
Cai isn't responsible for kids misusing and abusing the platform, their lazy inattentive parents are.
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u/Eazy12345678 i5 12600KF RTX 5070 1440p 1d ago
yes tons of small ai companies will fail
the big dawgs will not. Google, microsoft, Meta
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u/Tropical_Wendigo 1d ago
Big dawgs are sticking around because they're big and diversified. They have enough capital that they can light half of it on fire now and be fine. AI isn't really a big bet for them in the grand scheme of things.
New companies that are fully AI or pre-existing ones that decided to go AI Native however are in for a RUDE awakening. My prior company (fintech) was migrating their platform to be AI Native a year ago, and are apparently planning to cut staff by over 30% because they think those people can be replaced by vibe-coded agents. Those companies are going to get slammed when the momentum of the AI crash starts kicking up. Basically the equivalent of sitting ass-naked on a stove and then having it go from 0 to boiling before you can react. Cooked is a gross understatement.
Its yet to be seen what happens to companies that have been dabbling in AI generally but not overcommitting, the ones who have been taking their hand on and off the stove so to speak. I'd imagine most of those will just lose the efficiencies they had gained from Chat GPT/Claude/[insert LLM here] and go back to 'normal'. There's no chance they willingly pay the token cost.
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u/johnnybgooderer 1d ago
I think the U.S. is building out algorithms and data centers the same way we did the internet. We let tons of companies go bankrupt doing it so the losses could be socialized through bankruptcy and the gains could be bought for a fire sale price by the big telecoms.
I could see the same thing happening here. By design. All of our 401ks are funding this. Openai and Anthropic obviously can’t make their money back. They go bankrupt and Microsoft l, Google, and Amazon and maybe a few more fight over the remains.
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u/GenericFatGuy 17h ago
All three of those companies will survive because they're already giant established companies that were making billions per year even before AI. They're not going to survive because they're AI use cases are any better.
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u/7in7turtles 1d ago
If the gambles are big enough, the big dogs might fall. Enron fell, Kodak fell, big companies have come and gone. I’d be shocked if we don’t see a giant loser in the AI game soon.
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u/No-Paint-5726 1d ago
Kodak failed because they didn't pivot lol. AI companies have pivoted.
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u/7in7turtles 1d ago
If they don’t pivot from circular financing and a psychotically unprofitable business model they’ll probably fail to. Or they won’t because of regulatory capture and our tax dollars. Either way it’s not gonna be fun to watch
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u/Soft_Lunch_183 1d ago
Well either way its usually the smaller companies who go first, lets see what happens
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u/LutimoDancer3459 1d ago
One million people giving you a dollar are still one million dollar. Losing most of them will leave you with next to nothing. All those smaller ai companies are spending a lot of money to get the processing power from eg openai. Having them falling away will also hurt those bigger companies.
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u/Hot-Project-891 1d ago
millions of anime waifus are about to learn what a court ordered asset liquidation looks like.
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u/DOOManiac 1d ago
Hopefully the first of many.
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u/Brick_Grimes Ryzen 5 5600x Amd Rx 9070GRE 1d ago
Chapter 11 is just debt consolidation, they are still up and running. Chapter 7 would be them closing the doors. So this in large part doesn’t change much of anything in the current moment
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u/DOOManiac 1d ago
Yes, but at least it will hopefully signal to investors to shut the fuck up and tighten the wallets.
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u/Brick_Grimes Ryzen 5 5600x Amd Rx 9070GRE 1d ago
Yeah you’re right on that. Best thing we can see is this companies not turn a profit so investors say.. yeah I think I’m gonna pass on this shit and put my money in something that’s gonna make money.
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u/PatrickGnarly 9950x | 9070 XT I 32 gb DDR5 1d ago
While true can you imagine Facebook filing chapter 11 bankruptcy? Would be very shocking.
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u/Brick_Grimes Ryzen 5 5600x Amd Rx 9070GRE 1d ago
Yeah that’s true, seems like a lot of big companies end up doing some sort of joint venture to prevent filing bankruptcy now a days.
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u/Fearrsome 4090 Suprim Liquid X / i9-13900K / 32GB G-Skill DDR5 7200mhz 1d ago
Good. I hope there are many more to come.
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u/Equivalent_Clerk0 1d ago
What everyone hopes will happen with this site dying isn't going to happen. There are a thousand clones of character.ai now and there will be thousands more.
This was always a pointless app anyway. Sillytavern and other local front ends do it 100x better with fully custom character cards and no filters. Plug into something like OpenRouter for hosting any model you want, download (or make, its super easy) a character card, and go nuts.
You can have your harry potter x my little pony self insert adventure in no time.
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u/Express_Ad5083 W11, 7 7800X3D, 9070XT, 32 GB DDR5, X670 X AX V2. 1d ago
Bubble is popping
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u/ErmingSoHard 1d ago
!remindme 1 year
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u/Nunulu 1d ago
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u/OpenCatPalmstrike 16h ago
Considering banks are now shopping their data center and AI debt to others and offloading it into market in order to get it off their books? You tell me what the banks and other lenders are seeing that other people aren't.
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u/Express_Ad5083 W11, 7 7800X3D, 9070XT, 32 GB DDR5, X670 X AX V2. 1d ago
I also think it will pop by end of the year
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u/VenserMTG 1d ago
Not yet, but it's showing cracks. Not a single AI company can make money, they burn cash like there's no tomorrow, and many data center projects are being cancelled.
Just wait for a few AI companies to IPO and disclose how much they spend to make the little they make. Openai will be the signal
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u/Thy_Maker 1d ago edited 1d ago
The US market saw a big dip today, so it might actually be starting.
I saw it on my employer’s retirement plan since I just did a rollover and that it was many tech companies that were likely the cause.
I was super tempted to post about it saying this might actually be it, but considering how volatile the stock market can be I am refraining from that.
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u/OkOffice7726 13600kf | 4080 1d ago
2.5% drop in nasdaq is hardly ai bubble popping.
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u/Thy_Maker 1d ago
I know it’s wishful thinking at best, but I want to have hope.
I’m totally not being delusional.
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u/Cum_Fart42069 1d ago
that would make sense, I was just thinking that I should probably bite the bullet and invest already.
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u/Thy_Maker 1d ago
I was planning on doing the same, but if it’s going to crash and stock prices will be lower then I might see how this pans out.
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u/Cum_Fart42069 1d ago
I think if we were other people it would be fine but we're the people we are so for us it's always too late.
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u/AntiSocial_Vigilante i7-7700K, RTX 3080 12GB 1d ago
That was more due to the inflation reports i think?
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u/Icyknightmare Fedora 44 | 7800X3D | XFX Mercury 9070 XT 1d ago
Not yet. Feels like it's getting close though. The insane amount of debt funding the bubble is finally under some mainstream scrutiny, and Anthropic will need to release their real financials for the IPO.
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u/SnowChickenFlake RTX 4070S / Ryzen 7 5800XT / 1x16GB RAM / 21:9 1d ago
Yeah, but I imagine the common folk are gonna get on the short end if the stick
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u/SilentPizzle 1d ago
Coreweave yesterday now this, def starting to crack like private credit in 2024
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u/Clbull PC Master Race 1d ago edited 1d ago
Maybe if the online dating space wasn't full of scammers, bots, attention-seekers and passport sisters trying to match with Western men and use them as the means to a green card because mail order bride agencies are expensive yo, we wouldn't be in this mess.
The online dating industry is genuinely an oligopoly run by greedy parasitic fucks who don't care about you finding love and want to instead sucker you into paying a $40/month subscription to see who (hasn't) liked your profile.
This is why the youth are turning to AI girlfriends and looking up to douchemaxxing "role models" like Andrew Tate, Adin Ross, Sneako and Clavicular.
As much as I want to celebrate the demise of this AI startup, I worry for the teenagers who have turned emotionally dependent...
Also surprised to see this on a PC gaming sub. But I guess AI startups dying may be news-worthy when that shit is the reason PC components have more than quintupled in price.
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u/Nervous_Anxiety_3686 1d ago
>passport sisters trying to match with Western men
I was on a few dating apps recently until I met my current partner, and I was shocked by how much this has proliferated. It's especially bad on Boo.
I was getting countless likes from women in African and South Asian countries that had absolutely nothing in common with me. I talked to a few of them to find out what the deal was, and most of them spoke so little English we could barely converse. Some were clearly AI bots, some were scammers. A lot of them got discord and made e-girl'd up profiles on there, but didn't play any video games, which is odd considering how gamer-centric Discord is.
The ones that seemed like real people were all looking to move to the US. Some were more open about it than others.
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u/Clbull PC Master Race 1d ago edited 1d ago
Its also really fucking bad on Okcupid and Coffee Meets Bagel.
Facebook Dating also used to be filled with scammers but I assume Mark Fuckerberg and his team have cracked down heavily upon them...
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u/thatirishguyyyyy RX 9070 XT 1d ago
You give fuckerberg too much credit.
I'm pretty sure they need that bot traffic.
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u/LordOfFlames55 1d ago edited 1d ago
They completely enshittified their app a couple months back, apparently completely unaware of the plethora of competition. 100 deserved
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u/concern_john333 1d ago
Cool maybe some bigger ones next, they're all thieving child poisoning machines, also I want a better gpu without paying 1000+
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u/Jenny_Wakeman9 22h ago
Same here. I want a newer and better computer that can run anything I throw at it and not worry about a thing on space or performance.
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u/Mobile-Trouble-476 1d ago
This is why Local and Vibe coded AI should be the go to. All AI companies that are public face the very real possibility of not only getting a angry online mob after them but being sued into the ground.
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u/Visara57 5070ti | 7600x | 32GB DDR5 CL28 | 1440p 1d ago
Hopefully the beginning of the end for AI
It's killing our planet, sucking up resources for no profit
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u/eepy_lina Ryzen 7 9800x3d | RTX 4070 | 2x16gb DDR5 6000MHz CL30 1d ago
fucking finally, that site was cancer. which one's next
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u/MisandristBPDBarby 1d ago
It became terrible when they stopped the bots from acting out fight scenes or general ouchyness
I'll always remember the time Tony Soprano and Paulie Walnuts threw DarkSydePhil out of a window
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u/racergsxr1 18h ago
I used CAI for 3 years, watching it slowly dwindle into what it is today. I made the switch to local LLM chat nearly half a year ago but it's still sad to see my home away from home disappear.
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u/firedrakes 2990wx |128gb |2 no-sli 2080 | 200tb storage raw |10gb nic| 1d ago
old news from a week ago.
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u/nbaumg 1d ago
Imagine all the kids losing their “friends” or “bf/gf” of 4 years because the servers are shut down lmao