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Ed Zitron
@edzitron.com

And with that we have our first dead AI startup

Techmeme@techmeme.com

Character.AI files for Chapter 11 bankruptcy in the US, agrees to sell some assets to Disney for $20M, and plans to keep operating as it completes the sale (Rhea Rose Abraham/Reuters) Main Link | Techmeme Permalink

1.2K reposts5.7K likes

JazzComposer
@jazzcomposer.bsky.social

Aug 19, 2025 post: "What will happen if 20 AI companies are each building capacity for 10% marketshare?" This describes a bubble caused by over-investment in a new technology. If demand destruction occurs (e.g. AI produces incorrect or inconsistent output) the bubble burst can be soon and deep.

Nathan La Franeer 🏳️‍🌈
@oakbookshelf.bsky.social

Imagine if we spent as much on human education and training as we're now spending on AI. Imagine schools with unlimited resources. Imagine the accelerated development of young minds. Imagine opportunities created by helping all humans grow toward their full potential.

kushghost
@kushghost.bsky.social

education, housing, healthcare, green new deal there are sooo many good and necessary things this would be better spent on than ai. its absolute madness! fuck ai!

Ed Zitron
@edzitron.com

Character.ai was gutted in 2024 for $2.5 billion so Google could rehire one of the original authors of the Attention Is All You Need paper, but it hung in there for two years under Google’s “licensing” deal. This is the first of many I’m afraid. This is all being kept alive by venture capital.

Toronto Will
@torontowill.bsky.social

This pairs well with your "annualized run rate" article today, because Character has been in constant decline for the last 2 years. Any "annualized" projections that included them were x13'ing a number that was *not* reliably recurring.

Sean Milstead
@seanmilstead.com

Sorry, when you say it was gutted, more context please? Asking honestly cause “gutted for $2.5B” sounds like PE bought the company for $2.5B, then sold off a ton of assets before the bankruptcy.

Stressed_Scientist
@wittyretorthere.bsky.social

Google entered into a 2.7B agreement with them to get their old guy + some others under Google again. That gave them an expected value of 2.5B which along with the Google capital let them pay out the early investors at a value rate of 2.5B. Then they had to actually do something and bled money.

Alan Lawlor
@alanlawlor.bsky.social

No: this is the period of consolidation. The endgame is many going bust or bought out, with 2-3 players remaining. They can then charge what they like, once the fools out there have become dependent on AI for even the simplest of tasks

@ILeftRome
@ileftrome.bsky.social

Buddy of mine is a programmer, oversees a bunch of other coders. They use AI (buddy is generally a fan, TBH). Told me about how one of his people used AI to delete a file, which probably took more effort than, you know, just deleting the file. (To say nothing about resources, etc.)

𓃺𝖙𝖔𝖓𝖎🪴🩻
@tonizamboni64.bsky.social

if the economy is vulnerable to this kind of thing At All, if it is This susceptible to what is very clearly malicious and wasteful and weaponized against the public good, then "the economy" needs to be thrown out and exchanged for communism

Doug Savage, Rebel Alliance Attorney
@realdougsavage.bsky.social

Hey, smug asshole, you’re defending a product that actively kills the environment and has already done irreparable harm to the planet. If you want to talk about impacted lives, start with the ones that were already harmed when data centers became death fog generators.

Oucheez
@oucheez.bsky.social

If I had to guess why they went first, I'd say spending more on advertising. Goddamn did they manage to annoy me on a whole new level.