--- title: "Billion-Dollar AI Company Gives Up on AGI While Desperately Fighting to Stop Bleeding Money" description: "The legally embattled AI startup Character.AI has abandoned its original promise of ushering forth \"personalized superintelligence.\"" date: "2025-08-14" modified: "2025-08-14" authors: - name: "Maggie Harrison Dupré" job_title: "Senior Staff Writer" link: "https://futurism.com/authors/mharrison" url: "https://futurism.com/billion-dollar-ai-company-gives-up-on-agi" categories: - "Artificial Intelligence" tags: - "agi" - "ai industry" - "ai safety" - "character.ai" --- # Billion-Dollar AI Company Gives Up on AGI While Desperately Fighting to Stop Bleeding Money ![The legally-embattled AI startup Character.AI has abandoned its original promise of ushering forth "personalized superintelligence."]() *\Image: Getty / Futurism\* The new CEO of Character.AI — the controversial AI chatbot startup currently fighting a high-profile [child welfare lawsuit]() over the suicide of a 14-year-old user — says the company has abandoned its founding mission of realizing artificial general intelligence, or AGI. In [an interview with *Wired*](), recently crowned Character.AI CEO Karandeep Anand declared that the company "gave up" on the "aspirations" of its since-departed founders, Noam Shazeer and Daniel de Freitas. It's a striking move for a young company that, by 2023, had [reached a billion-dollar]() valuation [while promoting]() a core mission to "bring personalized superintelligence to everyone on Earth." "We are no longer doing that," Anand told *Wired*, emphasizing that the company has done "a lot of work" to shift away from building its own proprietary large language models (LLMs). The company now relies more than ever on open-source LLMs like Deepseek and Meta's Llama, said the CEO, with the executive adding that forsaking its AGI dreams has since allowed Character.AI to find "clarity and focus" around an "AI entertainment vision." In many ways, the startup's whiplash-inducing pivots feel like an important pulse check on the AI industry and its many sweeping, fantastical promises, which many experts fear is a [bubble waiting to pop](). The change in course, *Wired* notes, is backdropped by the cold reality that despite eye-popping investments from the likes of the venture capital firm Andreessen Horowitz and [Google]() — which rehired Shazeer and de Freitas as part of a [$2.7 billion acquihire]() last year — Character.AI has always struggled to [actually generate revenue](). That's a major problem, especially considering the process of building and training LLMs is [extraordinarily expensive](). But while Character.AI might be saving some cash by relying on open-source LLMs, the shift away from making its own models, which started following the multibillion-dollar Google deal, continues to undercut the promise that made the company so allegedly valuable to its backers in the first place. Character.AI and its investors [once touted]() its enviable position as a "closed-loop" AI maker, highlighting the company's ability to continuously collect user inputs and feed them back into its model as training data. "In a world where data is limited," Andreessen Horowitz partner and former Character.AI board member Sarah Wang [wrote]() in a celebratory March 2023 blog post announcing the firm's high-dollar investment, "companies that can create a magical data feedback loop by connecting user engagement back into their underlying model to continuously improve their product will be among the biggest winners that emerge from this ecosystem." Just over two years later, the situation looks drastically different. Character.AI hasn't just moved away from its original purported mission, but appears to be pretty far from the investor-praised value proposition that previously raked in billions. The company's focus on fulfilling its "AI entertainment vision" also comes as Character.AI works to rehab its public image following numerous safety controversies and lawsuits. Used in large numbers by minors, Character.AI has always marketed its platform as safe for kids aged 13 and over. But in October 2024, a Florida-based mother named [Megan Garcia]() filed a [headline-making lawsuit]() alleging that Character.AI had released a negligent and reckless product that emotionally and sexually abused her teenage son, 14-year-old Sewell Setzer, who took his life following extensive interactions with the platform's chatbots. (Character.AI sought to dismiss the case on First Amendment grounds, but the presiding judge [slapped down the motion]() and allowed the lawsuit to move forward.) Following the announcement of the lawsuit, multiple *Futurism* investigations into the platform revealed glaring content moderation problems. We found that the site hosted an alarming array of minor-accessible characters: user-grooming [pedophile bots](), [pro-eating disorder bots](), bots romanticizing [self-harm]() and [suicide](), and bots designed to [simulate real school shootings](), real perpetrators of those shootings, and most troublingly, those shooters' real victims. Anand, for his part, told *Wired* that safety has taken top priority at the company. (He also told the magazine that his six-year-old daughter enjoys using the app, which is definitely against platform rules.) "Making this platform safe is a partnership between regulators, us, and parents," Anand proclaimed to *Wired*, while also pushing back against the idea that Character.AI is a "companion" app. On the contrary, the CEO explained, Character.AI is primarily a roleplay app, which he argues is a fundamentally different thing. The company *has* issued [multiple]() [safety updates]() in response to [legal action]() and [reporting](), though it has continuously declined to provide journalists with information about what steps it took to ensure the safety of minor users before releasing its product to the public. And despite those [safety changes](), AI experts have continued to [rate the app as unsafe for minors](). In any case, whether it's promising personalized superintelligence or entertainment-driven roleplay, one thing is clear: Character.AI could be the canary in the coalmine, an early industry star that's struggled to live up to its lofty promises. **More on the AI industry:** [*If the AI Bubble Pops, It Could Now Take the Entire Economy With It*]() ## Author At Futurism, I've reported extensively on the rise of AI as a cultural and business force shaping the media industry, and more broadly how those dynamics are changing how we all consume and share information and relate to one another. I'm also fascinated by public health policy and ethics, the role of emerging tech in politics and governance — and the powerful people and forces at those intersections — climate change, and the environment. My investigation on Sports Illustrated's use of AI-generated authors with fictional biographies won a 2024 Mirror Award for "Best Story on Media Coverage of Artificial Intelligence in Journalism and the Media" from Syracuse University's SI Newhouse School, I contributed to Niemen Lab's 2025 Predictions for Journalism series, and I've discussed my work for Futurism during appearances on NPR, CNN, the BBC, the CBC, and more. I grew up in rural Pennsylvania and attended the University of Massachusetts Amherst, where I played Division I field hockey for the Minutewomen as a midfielder. Since then, I've lived in New Orleans, Louisiana and Manhattan, New York. I spend my free time running, reading, perusing archival fashion, and searching for the world’s best negroni. I also have a debonair tuxedo cat, Westley, who's named after "The Princess Bride." ### Author social links [Bluesky]()