Other AI Companies Should Be Very Afraid of What Just Happened to Character.AI, According to Its Own Bankruptcy Documents

Character.AI filed for chapter 11 bankruptcy after spending $56.1M on compute and $19.7M on salaries in eight months, while revenue grew slowly to $5.3M monthly but still incurred $8-9M losses. The company struggled to monetize heavy user engagement and resorted to ads, usage limits, and cheaper models before downsizing staff.