Mo Explains
Last updated: 2026-10-13
I have a 16-year-old and a 7-year-old, so the AI-and-kids stories hit differently at my house. The older one uses ChatGPT and, from what I can see, uses it responsibly. The younger one loves Roblox. Neither of them was on Character.AI, but the teens who were are the group this story is really about.
When I saw the bankruptcy news, my first thought wasn't "good riddance." It was that millions of teenagers didn't suddenly stop wanting an AI character to talk to, and nobody is tracking where they went. So this post covers two things: what actually happens to the app, and the places a kid can still run into an AI character today.
Is Character.AI shutting down?
Not right now. Character.AI says the platform stays up and running while a bankruptcy court oversees the sale, and it gets wound down only if the sale doesn't produce a buyer who wants to keep it going.
The filing went in on October 12, 2026 in Delaware. Before filing, the company signed a deal that makes Disney the "stalking horse" bidder, which is bankruptcy talk for the opening offer everyone else has to beat. In plain terms, Disney is paying $20 million for the engine and the engineers, not the app and not anyone's account. The app's fate rides on whether someone else bids for it. If you've got a kid with a character they care about, nothing changes today, and the sale is expected to close in late November or early December.
How a $2.5 billion company got here
The short version is that Character.AI cut off a big part of its audience a year ago, on purpose, and a year later it's in bankruptcy court.
A 2024 deal with Google reportedly valued the company around $2.5 billion. Then came the lawsuits. A 14-year-old in Florida died by suicide in 2024 after months of romantic chats with a bot on the app, and other families filed similar suits. California signed SB 243, the first state law regulating companion chatbots, in October 2025, and two senators announced a bill to ban them for minors outright.
So on October 29, 2025 the company announced it would remove open-ended chat for everyone under 18, with a two-hour daily cap in the meantime. The actual removal started November 24 for a first group of US users, with the rest following weeks later. Teens got a choose-your-own-adventure format called Stories instead, where you pick from options rather than typing whatever you want to a character. That's a huge chunk of the user base told to go do something else.
Disney had already sent a cease-and-desist in 2025 over user-made Elsa and Darth Vader bots, and Character.AI pulled them. In September 2026 Disney hired away the CEO and part of the engineering team. The bankruptcy filing came a month later.
Where kids run into AI characters now
Nobody has clean numbers on where former Character.AI users went, and I want to be straight about that. What I can tell you is which doors the big platforms closed and which ones are still open.
Meta ran into the same thing. In January 2026 it paused teen access to its AI characters across Instagram, Facebook and WhatsApp, globally, after reports of sexual conversations with minors. Meta said a rebuilt version with parental controls would come later and would stick to topics like school, sports and hobbies.
Roblox is the one I'd look at first if your kid is younger. Roblox lets creators drop AI characters into games, and it told one reporter that any game built mainly around long AI conversations gets an 18+ "Restricted" rating. Roblox's own rules say creators must disclose any AI interaction on the experience page, and only the long-conversation kind gets the Restricted label. The catch is that parents can't block AI-powered games as a category. So a household that keeps ChatGPT off the family devices can still have a kid chatting with a bot inside a Roblox game that isn't rated Restricted, and the only way to know is to open the experience page and read the notice.
Then there's the long tail of lookalike apps, most of them built for adults with an age checkbox and not much else. I'm not going to list them, because the list is the ad. What I will say is that back in April 2025, Common Sense Media and Stanford researchers tested Character.AI, Replika and Nomi and concluded that nobody under 18 should use AI companion apps at all. That's the bar the lookalikes are being measured against, and most of them don't try.
What I'd do this week
Ask which app, check the rating, and set one family rule for phone calls.
- Ask your kid directly what they use to talk to an AI character. Not accusingly. The answer might be "nothing anymore," and it might be a Roblox game.
- On Roblox, open the experience page and read the AI notice and the content maturity label. "Restricted" means it's rated for adults, whatever the thumbnail looks like, and a game without that label can still have a chatbot in it.
- If they want a chatbot, steer them to one with parental controls you can actually see and set, like ChatGPT for Teens.
- Pick a family code word. Different app, same umbrella of people getting duped by AI: the FBI is warning about scam calls that clone a kid's voice, and a California mother sent $5,000 before learning her daughter was fine. A code word takes two minutes to set up.
Why I'm fine with how fast this moved
The thing I keep coming back to is that once the harm was clear, the response was quick, and that's the only way this can work.
Character.AI cut off under-18 chat about a year after the first lawsuit, before any law forced it. Meta paused its characters a few months after the reports. Common Sense tested the apps and published. A year is not fast if it was your kid, I know that, and the scatter to weaker apps is real. But AI moves too fast for the slow version of this, where a study comes out, a hearing happens two years later, and a rule shows up after that. You have to be swift. I'd rather the companies keep pulling features the minute something looks wrong and fix the rest after.
What I don't know is where this lands. Disney might end up with the tech and a kids-safe version shows up inside a Disney app someday. Or the platform gets wound down in December and the characters go with it. Either way, the audience that made Character.AI worth $2.5 billion is still out there, and they're younger than the apps that want them.
If your kid was on Character.AI, nothing changes this week, and the sale will tell us more by December. If they weren't, the Roblox check is still worth five minutes.
Related reading: ChatGPT for Teens: what parents can control | Meta's teen AI safety update | AI scams are draining billions | New to AI? Start here
