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AIQuiet 5d · day 10

Character.ai bankruptcy exposes AI data-sale risks as bubble deepens

The chatbot company's collapse and asset sale to Disney leaves user data vulnerable to purchase by unknown buyers, raising privacy fears across the industry.

newest coverage 5d agosummary written 6d ago31 pieces160 likes & upvotes44 comments Google NewsMastodonHacker NewsRedditNewswires

What to know

  • Character.ai's bankruptcy leaves tens of millions of users' intimate data—including conversations with minors—available for sale to unknown buyers, outside the Disney asset deal.
  • Bankruptcy law in most US jurisdictions treats user data as a liquidatable asset, creating exceptions to privacy policies that users thought protected their information.
  • Experts warn this case signals a wider crisis: if the expensive AI sector enters a bubble collapse, billions of users across multiple platforms could face similar data-sale risks with minimal legal recourse.
  • US state attorneys general and privacy advocates are demanding stronger protections, but current law gives them limited power to prevent the sale or control its terms.

The dispute Whether systemic regulatory change is needed or whether users should simply assume companies will misuse data and adjust their behavior accordingly. · positions read across 20 posts and comments

most voices

This exposes a systemic risk requiring stronger privacy law and bankruptcy protections.

  • “When people talk to a personified bot, they often share much more personal and sensitive information.”

    Calli Schroeder · BBC ↗
some voices

Users should not rely on companies to protect privacy; personal responsibility matters more than corporate regulation.

  • “what would you even expect from creatures that do not understand the idea of privacy? there are real problems to solve without fretting about our own sloppy personal opsec.”

    falcennial@mastodon.social · Mastodon ↗

“You might disclose how you feel about [your] mom, or things like 'My friend so-and-so came out to me as gay, how should I respond?' Now people who've never interacted with Character.ai are part of the data set.”

Calli Schroeder, Director of AI and Human Rights Program, EPIC · BBC ↗

Character.ai Bankrupt chatbot platformDisney Asset purchaserCalli Schroeder Director of AI and Human Rights Program, Electronic Privacy Information CenterMelissa Jacoby Law professor, University of North Carolina at Chapel Hill40 US state attorneys general Coalition demanding protections

Character.ai bankruptcy exposes AI data-sale risks as bubble deepens
bbc.com

How it unfolded 2 developments, newest first · click a bar or a number to jump articlesposts

Peak 12 pieces in 3h at Nov 3, 10 AM; 31 pieces over 10 days (6 articles · 10 posts · 15 comments) Oct 29, 5 AM — 1 piece · 1 article — Google News 1Oct 29, 8 AM — quietOct 29, 11 AM — quietOct 29, 2 PM — quietOct 29, 5 PM — quietOct 29, 8 PM — quietOct 29, 11 PM — quietOct 30, 2 AM — quietOct 30, 5 AM — quietOct 30, 8 AM — quietOct 30, 11 AM — quietOct 30, 2 PM — 1 piece · 1 article — Google News 1Oct 30, 5 PM — 2 pieces · 2 articles — Google News 2Oct 30, 8 PM — quietOct 30, 11 PM — quietOct 31, 2 AM — quietOct 31, 5 AM — quietOct 31, 8 AM — 1 piece · 1 post — Mastodon 1Oct 31, 11 AM — quietOct 31, 2 PM — quietOct 31, 5 PM — quietOct 31, 8 PM — 1 piece · 1 article — Google News 1Oct 31, 11 PM — quietNov 1, 1 AM — quietNov 1, 4 AM — quietNov 1, 7 AM — quietNov 1, 10 AM — quietNov 1, 1 PM — 1 piece · 1 post — Hacker News 1Nov 1, 4 PM — quietNov 1, 7 PM — quietNov 1, 10 PM — quietNov 2, 1 AM — quietNov 2, 4 AM — quietNov 2, 7 AM — quietNov 2, 10 AM — quietNov 2, 1 PM — quietNov 2, 4 PM — 2 pieces · 2 posts — Mastodon 1, Hacker News 1Nov 2, 7 PM — 1 piece · 1 post — Mastodon 1Nov 2, 10 PM — 1 piece · 1 post — Mastodon 1Nov 3, 1 AM — quietNov 3, 4 AM — 5 pieces · 1 post · 4 comments — Reddit 5Nov 3, 7 AM — 2 pieces · 1 article · 1 post — Hacker News 1, Newswires 1Nov 3, 10 AM — 12 pieces · 1 post · 11 comments — Hacker News 11, Mastodon 1Nov 3, 1 PM — quietNov 3, 4 PM — quietNov 3, 7 PM — quietNov 3, 10 PM — quietNov 4, 1 AM — quietNov 4, 4 AM — quietNov 4, 7 AM — quietNov 4, 10 AM — quietNov 4, 1 PM — quietNov 4, 4 PM — quietNov 4, 7 PM — quietNov 4, 10 PM — quietNov 5, 1 AM — 1 piece · 1 post — Mastodon 1Nov 5, 4 AM — quietNov 5, 7 AM — quietNov 5, 10 AM — quietNov 5, 1 PM — quietNov 5, 4 PM — quietNov 5, 7 PM — quietNov 5, 10 PM — quietNov 6, 1 AM — quietNov 6, 4 AM — quietNov 6, 7 AM — quietNov 6, 10 AM — quietNov 6, 1 PM — quietNov 6, 4 PM — quietNov 6, 7 PM — quietNov 6, 10 PM — quietYesterday, 1 AM — quietYesterday, 4 AM — quietYesterday, 7 AM — quietYesterday, 10 AM — quietYesterday, 1 PM — quietYesterday, 4 PM — quietYesterday, 7 PM — quietYesterday, 10 PM — quietToday, 1 AM — quietToday, 4 AM — quietToday, 7 AM — quietToday, 10 AM — quiet 12
Oct 30Oct 31Nov 1Nov 2Nov 3Nov 4Nov 5Nov 6yesterdaynow · 1:09 PM ET
  1. 2

    Mastodon user dismisses privacy concerns as user responsibility

    A commenter on Mastodon rejects concern over Character.ai's data practices, arguing that grifters deserve failure and that privacy breaches reflect poor personal operational security rather than a systemic problem.

    “what would you even expect from creatures that do not understand the idea of privacy? there are real problems to solve without fretting about our own sloppy personal opsec.”
    — falcennial@mastodon.social
    • gvwilson@mastodon.social

      Glad to see this reporting from the BBC: when the AI bubble bursts, companies that have gone bust will sell your data. https://www. bbc.com/future/article/2026102 9-the-ai-bubble-could-expose-your-deepest-secrets

      gvwilson@mastodon.socialMastodon5d ago84▲view on Mastodon ↗
    2 more of the top 3 · 20 posts in this stretch

    • the only realistic demand is see is similar to why Azure, digitalocean etc are still breahing. There are incompetent companies that cannot live without certain services, so they'll stay dependent. A lot of companies are doing agentic engineering, and the rat race is even stronger there. You need a product that is better than a vibe-coded app, but…

      ramon156Hacker News5d agoview on Hacker News ↗

    • This will be far worse as plenty more 401ks are tied up in these stocks unlike back then when tech wasn't the darling of wall street. I think people severely underestimate just how much worse this is going to be than the dot com bubble.

      jadedfluxr/artificial5d agoview on r/artificial ↗
    all of them →
  2. background

    Experts warn of wider AI bubble collapse risks — Privacy researchers and legal experts contextualize Character.ai as evidence of a looming industry crisis: the AI sector is so expensive that many companies may never turn a profit, and if the bubble pops, bankruptcy sales could expose data from billions of users to unknown buyers with minimal privacy protections.

  3. background

    40 US state attorneys general file notice for child protections — A coalition of 40 state attorneys general filed a notice with the bankruptcy court demanding implementation of child safety and privacy protections, signaling official concern over the data sale.

  4. 1 day quiet
  5. 1

    BBC reports Character.ai bankruptcy and data-sale risks

    BBC analysis reveals Character.ai is going bankrupt after tens of millions of users, including children, shared intimate data with its chatbots. The company's assets are being sold to Disney for $20 million, but user data remains separate and available for sale to other buyers under bankruptcy law.

    “When people talk to a personified bot, they often share much more personal and sensitive information.”
    — Calli Schroeder

Also covered reported alongside — the timeline has no entry for these yet

  1. 2 outlets The artificial intelligence bubble is under threat: what we know

    first by UkrMedia News, 7d ago · also HN Frontpage

    1 more headline
  2. 2 outlets The AI bubble could expose your deepest secrets

    first by Yahoo News Canada, 8d ago · also BBC

and 1 smaller piece

What people are saying 16 voices from 3 sites · best of 20 · verbatim