Disney Wants to Buy the Chatbot Tech It Once Called Dangerous to Kids

Disney has put $20 million on the table for a piece of Character.AI's technology, according to a press release from Character Technologies tied to a bankruptcy proceeding that began yesterday. The offer covers what the company describes as "a non-exclusive perpetual license" to certain Character Technologies intellectual property. The release doesn't specify exactly which assets Disney is after.

The timing is the real story here. Just over a year ago, Disney was publicly trying to put distance between itself and Character.AI, not buy into it.

In September 2025, Disney sent Character Technologies a cease-and-desist letter, accusing the company of using Disney characters in ways that could do lasting damage to the brand, according to Axios. Disney's language at the time was blunt. The company wrote that Character.AI's chatbots were, in some cases, "sexually exploitive and otherwise harmful and dangerous to children," and said the behavior was "offending Disney's consumers and extraordinarily damaging Disney's reputation and goodwill."

Character Technologies responded by pulling every Disney-owned character off its platform. That looked like the end of the relationship. It wasn't.

Since the dust-up, Disney has brought on Karandeep Anand, Character.AI's former chief executive, as its first chief technology officer, according to Deadline. Disney declined to tell Ars Technica, which first reported the bankruptcy bid, whether it has plans to build Character.AI's technology into products aimed at kids.

So why would a company that spent last fall warning parents and regulators about Character.AI's chatbots now try to acquire the technology behind them? The answer seems to have less to do with Character.AI specifically and more to do with where Disney finds itself in the broader AI race.

A partnership that fell apart

Disney had been counting on a different AI deal to get it into the generative-AI business: a tie-up with OpenAI built around Sora, the video-generation tool. That partnership collapsed after Sora's abrupt shutdown, according to Deadline, and OpenAI is reportedly moving on without Disney. Sources told The Information that OpenAI plans to revive Sora on its own.

That left Disney without a clear foothold in consumer AI at a moment when the technology is reshaping how people interact with entertainment brands. According to Deadline, Disney has been actively looking for other ways to "get in the AI game and profit from its boom." Bidding on Character.AI's chatbot tech, even amid the company's bankruptcy and its own history of friction with the platform, fits that pattern. Character.AI has demonstrated something Disney needs evidence of: chatbot technology that large numbers of users actually want to talk to. If Disney can acquire rights to that underlying system, it doesn't have to build that kind of engagement from scratch, and it doesn't need OpenAI to get there.

What Disney might actually get

The press release leaves open the possibility that Disney's interest extends beyond a simple licensing deal. It raises the prospect that Disney could end up taking over the Character.AI platform itself, with the transition initially handled by Character Technologies' own employees. That's a notably different outcome than a company just licensing some code and walking away. It would put Disney in direct control of a chatbot platform it spent a year arguing was unsafe for the exact age group Disney's business depends on.

None of this is locked in yet. Bankruptcy sales are competitive by nature, and Disney's $20 million offer is just that: an offer. Character Technologies could still fetch a higher bid from another party, and Disney could walk away with nothing. The company hasn't said publicly what it would do with the technology if the deal goes through, including whether any resulting product would be marketed to children, the same population Disney's cease-and-desist letter was ostensibly written to protect.

What's clear is that Disney's AI strategy has shifted quickly over the past year, from legal threats aimed at shutting a chatbot company down, to hiring that company's former CEO, to now trying to buy its technology outright in bankruptcy court. Whether that strategy produces a product consumers ever see, or just a defensive patent play to keep Character.AI's tech out of a rival's hands, is the next thing worth watching as the bankruptcy process plays out.