Setbacks and Turnarounds in AI: 42% of Projects Halted

Asset sales, bankruptcies, scheduled shutdowns, and reversals are piling up in both consumer and professional AI. Disney is positioning itself for rights to Character.ai while HP acquires most of Humane AI Pin. Meanwhile, a $250 million settlement hits Apple over Siri, and 42% of AI initiatives are reportedly abandoned according to S&P Global Market Intelligence.

Asset Sales and Shutdown Timelines Multiply

Disney is currently the leading bidder for a license on certain intellectual property rights of Character.ai, with a $20 million offer. The Character.ai application continues to operate during the proceedings, with the sale expected by the end of November or early December. This situation follows Character.ai's bankruptcy filing in early October, driven by legal, regulatory, and operational difficulties. In the hardware sector, Humane shut down its AI Pin business in February 2025, with most assets acquired by HP for $116 million. On the services side, Notion has scheduled the closure of Notion Mail for September 22, while the family assistant Ollie announced its shutdown for November 6. Relay, specializing in AI-driven workflow automation, ceased all operations in August 2026.

Character.ai Goes from Unicorn Status to Bankruptcy Proceedings

Character.ai, founded in 2021 by Noam Shazeer and Daniel De Freitas, both former researchers at Google, offered users the ability to chat with customizable bots, often modeled after celebrities or fictional characters. In 2023, the company raised $150 million in a funding round, bringing its valuation to $1 billion. The following year, Google spent nearly $2.7 billion to acquire a license for Character.ai's technology and allowed its founders to rejoin the company, while the startup continued its operations without them. Character.ai faced several lawsuits: families filed lawsuits claiming that certain chatbots contributed to suicides and self-harm among teenagers, and Disney issued a cease-and-desist for unauthorized use of its characters. By the end of last year, the platform banned open discussions for users under 18, and then, along with Google, agreed to settle several lawsuits in early 2026. Despite these measures, Character.ai filed for bankruptcy five years after its launch.

Contested Dedicated AI Devices: From Recall to Buyouts

Humane AI Pin raised $230 million from investors but encountered serious performance issues and had to warn customers of a potential fire risk related to the charging case. The AI Pin business was shut down in February 2025, with most assets acquired by HP for $116 million. The Rabbit R1, unveiled at CES in January 2024, aimed to perform tasks on behalf of its user. Rabbit reported selling 100,000 units shortly after launch, but early feedback described the product as incomplete, unreliable, and lacking truly useful integrations. The company continued to develop the R1 through updates and now presents it as a computer control device for agentic uses.

Automation and Messaging: Giants Absorb Value

Relay, which automated email and task flows via AI agents, shut down in August 2026, as similar functions were integrated directly by OpenAI, Google, and other major platforms. Notion Mail, launched in April 2025 to organize and automate messaging through AI, scheduled its closure for September 22 after realizing that its users preferred separate AI agents. Ollie, launched in June 2026 and among the first consumer applications compliant with SOC 2 standards, aimed to centralize and synchronize dispersed family information. Due to insufficient differentiation, Ollie announced its closure for November 6.

Alternative Platforms: Audio Content, Test Benches, and Role-Playing Games Stopped

Huxe, developed by former members of the Google NotebookLM team, transformed text into conversational audio like podcasts and shut down in May 2026, partly because large platforms offered similar experiences to a wide audience. Yupp allowed users to compare responses from hundreds of AI models side by side, with user voting and cryptocurrency rewards. At its peak, the platform provided access to over 800 models, including those from OpenAI, Google, and Anthropic. According to its founders, Yupp never found a sufficient product-market fit and closed in March 2026. Figgs AI, active from 2023 to 2024, offered the creation and interaction with AI characters for role-playing and storytelling. The platform reportedly surpassed one million users, but its creators deemed the service's free model too costly and decided to shut it down.

Big Names in Correction Mode: Reversals and Delays

OpenAI briefly transformed ChatGPT into a super-application on July 9, consolidating several modes like "Chat," "Codex," and "Work" and renaming the classic version, before reverting to the previous interface after criticism over the complexity of the redesign. Meanwhile, OpenAI shut down or integrated several standalone products into ChatGPT: discontinuation of ChatGPT Atlas on August 9, integration of Operator, refocusing of DALL-E, and closure of Sora in March 2026. Apple introduced Apple Intelligence in 2024, showcasing a more contextual version of Siri, but repeatedly delayed the release of the new Siri due to engineering issues and bugs, contributing to a $250 million settlement regarding the iPhone 16. Siri's AI appeared in the beta of iOS 27 last July, with an initial rollout for English speakers this month. According to S&P Global Market Intelligence, about 42% of AI projects are ultimately abandoned, for reasons ranging from funding to low demand.