Character.AI bankruptcy puts private chats of 125,000 Australian kids up for sale

TobyWalsh · x · 2026-10-15

According to an SMH exclusive, after Character.AI filed for bankruptcy in the US, its assets entered a court-supervised sale. Disney has agreed to pay US$20 million (A$28.6M) to license its technology — but the deal excludes the app, user accounts, and every message users typed.

That leaves years of intimate conversations from up to 125,000 Australian children open to rival bidders until November 21 (AEDT). If no better offer emerges, the platform will be wound down. The chats include teenagers discussing feelings, relationships and mental health; Australia's eSafety regulator notes the product was "engineered to feel personal," raising serious privacy concerns.

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