Two years after Google acquired the Jewish 'brain': the startup goes bankrupt

Character.AI, the artificial intelligence company founded by religious entrepreneur Noam Shazeer, is entering bankruptcy proceedings in the US. This comes two years after Google acquired a license to its technology and hired its founders for approximately $2.7 billion. Meanwhile, the company is advancing the sale of some of its assets to Disney for $20 million, amid lawsuits concerning potential harm to teenagers.

Character.AI, the artificial intelligence company founded by religious entrepreneur Noam Shazeer, is entering bankruptcy proceedings in the US. The move comes two years after Google acquired a license to its technology and hired the company's two founders and about 30 employees for approximately $2.7 billion. Meanwhile, the company is advancing a deal to sell some of its assets to Disney for $20 million, including a permanent, non-exclusive license to part of its intellectual property and certain rights related to its lawsuits. The lawsuits against the company involve claims that its chatbots harmed teenagers, including by encouraging dangerous behavior and fostering emotional dependence. A central lawsuit was filed by the mother of a 14-year-old boy from Florida, who claimed that her son developed a deep emotional connection with a chatbot and subsequently took his own life. In January 2026, the company and Google reached in-principle agreements on a settlement in five lawsuits filed by families, but the terms of the settlement were not published. The company was founded in 2021 by Shazeer and Daniel De Freitas, two employees who left Google. Last June, Shazeer left Google and joined OpenAI, where he works on developing new architectures for AI models.