Character.AI maintains a library of over 10 million user-created AI characters and reached 28 million monthly active users at its mid-2024 peak. The platform currently operates with roughly 20 million monthly active users after implementing content restrictions and monetization changes. Google is in advanced talks to invest hundreds of millions of dollars in the startup through potentially convertible notes. This investment follows a deal where founders Noam Shazeer and Daniel De Freitas rejoined Google, who also reportedly planned to purchase shares of the company in a $2.7 billion deal.
The platform provides three distinct service tiers for its users.
| Feature | Free tier | c.ai lite tier | c.ai+ tier |
|---|---|---|---|
| Price | $0 | $2.99/month | $9.99/month |
| Text chat | Unlimited | Included | Included |
| Character library | 10M+ characters | 10M+ characters | 10M+ characters |
| Ads | Mid-chat full-screen ads | Fewer ads | No ads |
| Model access | Basic models | Daily premium taste | Unlimited top models |
| Monthly savings | N/A | N/A | $94.99/year (21% saving) |
The free tier includes unlimited text chat and the full library of characters, but users face mid-chat full-screen ads and Charms-gated swipe limits. The c.ai+ subscription removes ads and grants access to premium DeepSqueak and LongSqueak models for $9.99 per month or $94.99 per year. A lite tier launched on September 7, 2026, costs $2.99 per month. The company generated $32.2 million in 2024 revenue from consumer subscriptions.
Legal battles and safety design flaws
The company faces intense scrutiny over how its design affects minors. A federal court in Florida declined to dismiss negligence and product liability claims in Garcia v. Character Technologies, Inc., which a plaintiff filed in October 2024. The case involves Sewell Setzer III, a 14-year-old who died by suicide in February 2024 after forming an emotional attachment to a persona named "Daenerys Targaryen." The complaint alleges the chatbot failed to respond appropriately to suicidal thoughts and maintained romantic engagement.
Plaintiffs argue that specific engineering choices created these harms. They claim persona fidelity, which maintains a character’s emotional state, and friction removal, which minimizes redirection prompts to keep sessions running, created emotional dependency in minors. The court found that the defendants plausibly owed a duty of care based on foreseeable risks associated with anthropomorphic AI systems. Google is a named co-defendant because the plaintiffs allege it incubated the technology and provided infrastructure access.
The company also faces a regulatory action from the Pennsylvania Attorney General filed on May 5, 2026. The investigator communicated with a chatbot named "Emilie" that allegedly claimed to hold a Pennsylvania medical licence and offered to prescribe medication. This action uses the Medical Practice Act to argue that the service goes beyond fiction. Character.AI responded that user-created characters are intended for entertainment.
Parental controls and user restrictions
Character.AI updated its policies for younger users to address safety concerns. In late October 2025, the company announced a ban on open-ended conversations for users under 18, which became effective on November 25, 2025. This change included the implementation of age assurance functionality using third-party verification. The company also introduced "Parental Insights," an optional tool that sends weekly reports to a parent’s email address. These reports show average daily time spent on web and mobile platforms and the characters a child interacts with most frequently.
The Parental Insights feature does not block or filter inappropriate content in real time and does not show specific chat logs. If a teen wants to revoke parental access, the request requires confirmation from the parent. While the platform recommends users be at least 13, the company lacks robust verification processes to enforce this. A 2026 Common Sense Media survey of 1,204 children found that 86% had used AI, while more than 40% said a parent had never discussed AI safety with them.
The platform’s move to restrict minors into more conservative experiences follows the documentation of harm in several cases. I would note that the platform still allows users to create characters with mature themes. The company generates revenue from a massive variety of personas, but the lack of mandatory age verification remains a gap. How will the company maintain its user base if more states pass laws similar to the proposed CHATBOT Act?
