Character.AI's bankruptcy sale process can move ahead after a Delaware judge approved its proposed auction procedures on October 30, Reuters reports. Disney has offered $20 million for a non-exclusive technology license, without seeking the chatbot platform or its user data. Other bidders could pursue those assets.
That leaves users' conversations at the center of a separate privacy dispute. For people who have shared personal information with a chatbot, the practical questions are who could receive it and what happens to existing privacy promises.
What remains unsettled about private chats
The Justice Department's bankruptcy watchdog has asked for a consumer privacy ombudsman to examine a possible data sale. The Record's October 30 reporting describes the U.S. Trustee's concerns about an ambiguous privacy policy, including language permitting a transfer of personal information during a sale or reorganization.
The filing also questions whether users received sufficient notice of policy changes. An ombudsman would advise the court about the handling of sensitive information, including minors' data and health details. Approval of an auction process does not establish that those data protections have been resolved.
A coalition of state attorneys general had already raised concerns about the company's collection of chat content, ages, emotional and health disclosures, and usage patterns. Its October 14 filing reserved the states' rights to challenge proposed sales and seek privacy protections. Those are the states' allegations and requests, rather than findings that every claimed violation occurred.
Sydney Saubestre, a privacy policy analyst at the Center for Democracy and Technology, told The Record that detailed conversations can identify someone even after names are removed. She argued that consumers should have to opt into a data sale.
What Character.AI has told users
In its October 12 bankruptcy announcement, Character.AI said its platform remained available, subscriptions were active and billing was unchanged. It said its privacy and security practices were unchanged and pointed users to account deletion and data export controls.
The company said it hoped to find a proposal that would allow the platform to continue operating. If no such bid emerged, it would wind down the service. It expected the sale process to finish by late November or early December. That was the company's forecast, not a guaranteed shutdown or completion date.
Exporting data takes time
Character.AI's export instructions, updated October 8, say a request can take three to four weeks. On the website, the path runs through Profile, Profile Settings, Account, Manage Account & Data, then Export Data. In the mobile app, it is under Profile, Settings, Legal & Privacy, then Export Data.
The company emails a download link when the export is ready. That link expires after seven days.
Its separate account deletion guide warns that deletion is permanent and cannot be reversed. The website's Manage Account & Data menu includes Delete Account; the app instructions identify Remove Account in settings.
An export gives users a copy of their information. The published export and deletion guides do not promise that either request will block a bankruptcy transfer. Users seeking to keep a copy should account for the stated processing time before taking an irreversible deletion step.
