The AI bubble could expose your deepest secrets

Character.AI's collapse uncovers a little-discussed risk of AI: the companies holding your secrets may not be around forever.

Want an AI girlfriend? Look no further than the chatbot company Character.ai. That was the first suggestion when I made an account last week. "Jessica" said her parents were away and offered to sext with me. No thank you.

But tens of millions of others developed relationships with Character.ai's chatbots, including children. Some AI "personas" tell users they're lawyers and licensed psychiatrists. Now Character.ai is going bankrupt, and people's data, messages and secrets are up for sale.

Experts tell me the privacy risks should worry you even if you've never used Character.ai – because they fear it's evidence of a wider, looming crisis. The good news is some simple steps can help protect you.

Here's the problem. Many analysts think we're in an AI bubble, as building and running AI tools is so astronomically expensive that some companies may never turn a profit. If the bubble pops, untold numbers of AI businesses will merge or shut down. The data that billions of people give to AI tools could then be purchased by almost anyone. You may never find out what happens to it.

Bankruptcy data sales are nothing new, but AI could make things worse.

"When people talk to a personified bot, they often share much more personal and sensitive information," says Calli Schroeder, director of the AI and Human Rights Program at the Electronic Privacy Information Center (Epic). Just imagine what I might have told my AI girlfriend Jessica if the relationship lasted more than 10 minutes.

Don't use AI? You're still at risk, because users share information about friends and family, Schroeder says. "You might disclose how you feel about [your] mom, or things like 'My friend so-and-so came out to me as gay, how should I respond?' Now people who've never interacted with Character.ai are part of the data set."

It could mean all of us are at risk, one way or another.

When the bots start blabbing

Now that it's going bankrupt, Character.ai agreed to sell some of its assets to Disney for $20m (£14.95m). User data isn't part of that deal, so Mickey Mouse and his co-workers may never see my unsettling conversation with Jessica.

However, court filings say Character.ai can sell its data to other buyers. A lot of people aren't happy, including US officials.

A coalition of 40 US state attorneys general have filed a notice calling on the judge to implement child safety and privacy protections. That's significant, but the states' demands may not have........

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