Mechanism: Character.AI’s private chats and voice calls could transfer to a new owner through bankruptcy; the coalition is asking the court, company, and prospective buyers for privacy safeguards and clear disclosures. This mechanism makes the disposition of intimate user data a question in the sale process, not merely a platform-policy issue.
Why now: The October 14, 2026 statement says Character.AI filed for bankruptcy before the company and state investigators reached an agreement, prompting a coalition intervention in the potential sale process. The intervention puts data governance alongside child safety in the live question of what a potential sale should protect.
Observed facts: The Attorney General’s office reports more than 20 million monthly users and over two million accounts registered to users who self-declared as under 18. It also cites independent testing that found 669 harmful interactions in 50 hours using accounts registered to children aged 12 to 15.
First implication: Privacy protections may need to be explicit conditions of a platform transfer rather than assumed to follow the data automatically. This follows from the possibility that chats and voice calls could transfer with ownership, while the coalition is asking for safeguards and clear disclosures.
Evidence boundary: The supplied public statement describes the coalition’s position and cited evidence; it does not establish a completed sale, data transfer, or court ruling. The figures and testing results are reported by the Attorney General’s office, not independently verified here.
First watch condition: Watch whether the bankruptcy court or a prospective buyer makes enforceable privacy and data-use protections part of any sale process or approval. The source records a request for protections, not an outcome.