40 State Attorneys General Intervene in Character.AI Bankruptcy Over Consumer Data Protection
Source Summary
New York Attorney General Letitia James and 39 other state attorneys general have filed a notice of interest in Character.AI's Chapter 11 bankruptcy case to ensure consumer data protections are addressed in any asset sale or transfer. Character.AI announced Tuesday it was filing for bankruptcy and selling some assets to Disney. The AGs warn of serious regulatory risks in transferring the company's technology.
Why it matters
A coordinated multi-state regulatory intervention signals that consumer data handling in AI company bankruptcies will face heightened scrutiny and potential legal requirements before asset transfers are approved.
What remains uncertain
The specific data protection requirements that will be imposed on the asset transfer and the outcome of the regulatory review remain unresolved.
