AI bot company Character.ai seeks bankruptcy protection

The AI boom is seeing one of its first major busts, as Character.ai has filed for Chapter 11 bankruptcy protection while it searches for a buyer. Founded in 2021, Character.ai enables users to create customizable chatbots and interact with them, and by February 2025 claimed to have over 20 million monthly active users. However, it failed to turn them into a profitable revenue stream, and has been losing $8 million a month, according to Reuters .