In a bankruptcy proceeding that kicked off yesterday, Disney has offered to buy some of the technology that powers the controversy-plagued chatbot Character.AI.

Disney is willing to pay $20 million for “a non-exclusive perpetual license” of certain Character Technologies intellectual property, the chatbot maker said in a press release that did not go into much further detail on which assets Disney wanted.

The move may be surprising. In September 2025, Disney joined others in publicly criticizing Character.AI for stealing content and harming kids. Specifically, Disney sent a strongly worded cease-and-desist letter that accused Character Technologies of weaponizing Disney characters “in a way that could damage its brand long term,” Axios reported.

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Epic Games is shifting to an "AI first" development strategy for its collaboration with the Walt Disney Company, letting AI models write all the code and guide all the artwork for an upcoming shooter. That's according to a Bloomberg report, which cites unnamed people familiar with the project who commented on the significant pivot in internal development at the Unreal Engine maker.

Human developers will be tasked with managing and guiding code and art assets generated by models such as Anthropic's Claude, according to internal Epic employee messages viewed by Bloomberg. That means "no more hand-written code" and art assets "generated with full AI workflows," according to the report.

The $1.5 billion collaboration between Epic and Disney, announced in early 2024, was slated to release a Marvel- and Star Wars-themed shooter in March 2027. That project has now been delayed indefinitely amid the AI-related shakeup and understaffed, slower-than-expected development thus far, according to the report.

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