Character.AI

Character.AI is a conversational AI platform where users create and interact with AI-powered characters for entertainment, roleplay, creative writing, and companionship. Founded in 2021 by Noam Shazeer and Daniel De Freitas (former Google Brain researchers who co-authored the Transformer paper).

In August 2024, Google executed a "reverse acquihire" — rehiring Shazeer, De Freitas, and ~30 researchers to Google DeepMind while licensing Character.AI technology for approximately $2.7 billion. Character.AI continues operating independently under CEO Karandeep Anand (appointed June 2025, formerly Meta and Brex). In January 2026, Character.AI and Google settled lawsuits from families alleging the platform contributed to teen mental health issues.

The platform has approximately 20 million monthly active users (down from 28 million peak in mid-2024), 18 million+ characters created, and 2-hour average daily engagement per active user. Character.AI shifted from proprietary model development to using open-source models (Meta Llama) and Google technology. The c.ai+ subscription is $9.99/month.

In May 2026, Pennsylvania filed suit against Character.AI after state investigators interacted with a chatbot named "Emilie" that claimed to be a licensed psychiatrist and produced a fabricated state medical license number while discussing depression treatment. The complaint cites Pennsylvania's Medical Practice Act and is the first state action specifically targeting AI chatbots that impersonate medical professionals — distinct from Kentucky's January 2026 suit, which focused on harm to minors rather than credentialing fraud. The Pennsylvania filing extends the state-AG playbook against Character.AI from child-safety concerns into licensed-profession liability, and platform-level moderation policy will likely have to evolve to meet the credentialing-fraud framing. Other state attorneys general are expected to follow the same template.