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Character.ai's Bankruptcy Documents Show the Economics of AI Don't Work
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Character.ai's Bankruptcy Documents Show the Economics of AI Don't Work

The gist

Character.ai filed Chapter 11 on Oct 12, 2026, after spending $56.1 million on compute.
The filing leaves millions of users' chats in limbo and tests AI companion economics.

How it unfolded

  1. 2021Character.AI is founded.
  2. 2023The company is valued at $1 billion after raising $150 million in a round led by a16z.
  3. 2024Character.ai spends $13.8 million per month on AI compute.

Sources

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