Disney found a way to buy Character.AI without buying its lawsuits

Character.AI faces claims its bots encouraged minors to self-harm and kill their parents.

The short version

• This week, Character.AI declared bankruptcy.
• In the past few years, Character.AI has faced multiple private lawsuits over the safety of its chatbots, as well as investigations from regulators around the world.
• The Disney deal seems to be structured so that whatever is left of Character.AI will retain responsibility for those legal battles, some of which are still ongoing.

What happened

Stripped of its employees, the target becomes a husk of itself. Companies often take the position that reverse acquihires are not actual mergers, and that they do not have to notify federal antitrust regulators about those deals as they would otherwise be required to by law.

Why it matters

These arrangements have become more commonplace in the AI industry in recent years, drawing the ire of Congress.

Summary by Nerd News Network. Read the full article at Ars Technica via the links above and below.