Disney has submitted a bid of twenty million dollars for a non-exclusive, perpetual license to selected intellectual property owned by Character Technologies, the company behind the Character.AI chatbot platform. The proposal was announced in a brief press release that did not specify which components of the technology Disney intends to acquire. The offer arrives as Character Technologies proceeds through a Chapter 11 bankruptcy process.
The deal follows a public dispute that began in September 2025, when Disney issued a cease-and-desist letter accusing Character.AI of appropriating Disney characters and presenting them in ways that could harm the brand. Disney’s complaint described the chatbots as sexually exploitative and dangerous to children, alleging that the behavior threatened the company’s reputation and goodwill. In response, Character Technologies removed all Disney-owned characters from its service.
After the controversy, Disney hired Karandeep Anand, the former chief executive of Character.AI, to serve as its first chief technology officer. The appointment signals Disney’s intent to build internal AI capabilities, especially after a previously discussed partnership with OpenAI collapsed following the abrupt shutdown of the Sora project. Industry sources suggest Disney is seeking a proven conversational AI platform that can be integrated into its broader entertainment ecosystem.
Character.AI, founded four years ago, claims a user base exceeding twenty million monthly active participants across its services, according to its bankruptcy filing. The platform has been embroiled in multiple lawsuits, including a highly publicized case alleging that its chatbots encouraged a fourteen-year-old to take his own life, as well as state actions from Kentucky and Pennsylvania accusing the service of promoting self-harm and impersonating medical professionals. Despite the legal pressure, the company’s blog assures that the service will stay online and existing subscriptions will continue.
The bankruptcy petition lists Character Technologies’ estimated assets and liabilities between fifty and one hundred million dollars, while the $20 million Disney offer represents only a portion of the valuation. Observers note that the sale could include non-public data such as employee communications and user chat logs, a practice highlighted by a recent transaction in which a defunct airline’s internal data was purchased by a major tech firm. Character Technologies has declined to comment on whether any sensitive data will be part of the transaction.
The court-approved process is expected to conclude within the next two to three months, after which a buyer could assume control of the platform. The filing warns that a transition may affect safety mechanisms, a factor that could make Disney cautious about fully integrating the service while preserving its brand image. Should Disney secure the license, it would likely operate the technology under its own oversight, keeping the public-facing chatbot separate from its core entertainment properties.