One of the stranger corporate turnarounds of the AI boom just got stranger. Disney — the company that once accused Character.AI of copyright infringement for letting users chat with knockoff cartoon characters — is now offering jobs to the majority of the bankrupt chatbot startup's workforce.
A legal filing reported by TechCrunch, spotted by Bloomberg, revealed that Disney has agreed to make employment offers to at least 60 Character.AI employees, paying an estimated $60 million in annual compensation. The "vast majority" of those offered jobs have accepted, according to the filing. It is part of Disney's $20 million stalking-horse bid for the startup's assets — the opening offer that anchors the court-supervised auction, which a higher bidder can still top.
The reversal is almost total. Disney's cease-and-desist was one of the many legal blows that helped drive Character.AI into Chapter 11. Now its former CEO, Karandeep Anand, is Disney's first CTO, and Disney is absorbing the staff Google left behind.
Because that is the real arc here: Character.AI is the textbook case of the reverse acqui-hire. In 2024, Google paid roughly $2.7 billion to license the startup's models and bring founders Noam Shazeer and Daniel De Freitas back into the fold. What remained stopped training its own models, ran on other companies' technology, and burned $8 million to $9 million a month while lawsuits — including one from the mother of a 14-year-old boy who became obsessed with a chatbot — and state investigations piled up. The filing describes a company hobbled by high costs and "potential litigation-related liabilities and regulatory engagement" despite a "large and engaged user base."
What Disney pointedly is not getting: the app, the brand, and the users' chat logs. Those were carved out of its bid, which is exactly the contested part — 40 state attorneys general warned earlier this month that those intimate conversations, from more than 20 million users, should be protected before any sale closes.
So the talent gets sorted in bankruptcy court while the data stays the fight. Watch the auction, expected to wrap in late November or early December, and watch whether anyone bids specifically to own the logs — because that is where the real leverage in this sale still sits.
— via TechCrunch