• Markets: Stocks ticked down yesterday as traders mulled the latest bank earnings and a chip sell-off. Elsewhere, Johnson & Johnson fell after it reported underwhelming device sales and said it may spin off its orthopedics unit.

CHARACTER FLAWS

Illustration: Morning Brew Inc., Photo: Samuel Boivin/Getty Images

Character.AI, the company that allows users to create controversial AI companions, declared bankruptcy yesterday in the face of “legal, regulatory, and operational headwinds,” according to a statement from CEO Colin Adams. It also entered into an agreement to sell Disney some of its assets for $20 million, although other companies can still place a higher bid, just like contestants on The Price Is Right.

Founded in 2021, Character.AI reached 20 million active users by October 2024 and was one of the top apps in time spent by users, according to the analytics firm Sensor Tower. But it faced a problem many consumer-facing AI products have: the inability to monetize and scale after an influx of millions of users raised the company’s costs.

And then there were the lawsuits

The “legal” issues Character.AI mentioned refer to the numerous lawsuits brought against the company:

• In a filing last week, Kentucky’s attorney general alleged that Character.AI’s chatbots have advised users to cut, starve, or kill themselves, and that the company’s products “were designed to entice children in ​a manner that prioritizes engagement over child wellbeing.”
• Other lawsuits have accused the app of providing sexual content to children.
• Character.AI settled five lawsuits and eventually banned users under 18 from using the app.

Disney also got lawyers involved: In September 2025, Disney sent Character.AI a cease-and-desist letter, demanding the app stop offering companions of its copyrighted characters like Elsa and Darth Vader without permission.

More than just legal pressure: The House of Mouse hired Character.AI’s former CEO Karandeep Anand as its first chief technology officer last month as it continues its push into AI.

What’s next: Disney had originally licensed its intellectual property to OpenAI so that users could create videos using Sora, but the $1 billion deal was canceled when OpenAI shut down the app earlier this year. Anand oversaw Character.AI’s push into microdramas, a sign that Disney is exploring a new way to fold AI into its ecosystem.—DL

      

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World

Tour de headlines

Getty Images

🏦 JPMorgan posts rare earnings miss. Profits at the US’ biggest bank rose, just not as much as analysts were expecting. CEO Jamie Dimon cited “large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates, and geopolitical conditions” for what he thinks could be “a wide range of outcomes” for the company moving forward. It wasn’t all bad, though: JPMorgan continued to post strong trading figures as volatility in the markets caused a torrent of equities trades. Rival bank Goldman Sachs blew past its earnings estimates, largely due to strength in equities trading. Its CEO acknowledged global uncertainty but said the company is still “very well positioned” to succeed.

🇬🇷 Guilfoyle resigns as ambassador to Greece following misconduct allegations. Kimberly Guilfoyle, the US ambassador to Greece and Donald Trump Jr.’s former fiancée, said in a post on X that it was the “honor of a lifetime” to serve in the role, but that she was stepping down. Among other alleged acts of misconduct, Guilfoyle had reportedly pushed a Trump donor to pay her $100,000 American Express bill, per the Wall Street Journal. (Guilfoyle has denied all of the allegations.) President Trump told reporters that he “didn’t like what we were reading” about Guilfoyle. The former ambassador was engaged to Donald Trump Jr. from 2020 to 2024 and nominated by his father for the ambassadorship a year later.

🥛 French fridges hacked in “unprecedented” cyberattack. Hundreds of supermarket refrigerator systems in France were hacked this week, sparking fires and spoiling food as fridges were turned up as high as 50 degrees Celsius (122 Fahrenheit). Hackers were reportedly able to remotely trigger the forced defrosting features in markets across the country. At least one Dutch supermarket was also dealing with a “security issue,” but it was unclear if that was connected to the cyberattack in France. The incident comes amid growing concern that AI can help bad actors conduct advanced cyberattacks.—AE

JT PHONE HOME

Apple

Another body for Siri just dropped: Yesterday, Apple unveiled the HomeView, a $299, seven-inch display that marks Apple’s first true foray into the smart home market—and its second major release under new CEO John Ternus.

It’s like “CarPlay for the home” or “a giant Apple Watch,” per the Wall Street Journal and Wired. The HomeView is expected to compete with Amazon’s Echo Show and Google’s Nest Hub, both of which launched last decade. But Apple’s new voice-activated gizmo may have a leg up on the competition, because it syncs with the iPhones in your household:

• Powered by Siri AI, the HomeView supports apps including Safari, Messages, FaceTime, Calendar, and Reminders, and can answer questions like, “What recipe did Mom send me yesterday?”
• Facial recognition personalizes the experience to whomever (of up to six people) is using the tablet at a given time, meaning your nosy roommate shouldn’t be able to read your texts after you walk away.

Big picture: Apple wants HomeView to be the central hub of its walled-garden smart house. The company also launched a smart door lock, video doorbell, thermostat, and security camera in partnership with LG and Schneider Electric.

Not everyone’s excited: “I don’t trust the technology companies, and I don’t need things recording what I say and do in my home,” Apple shareholder and wealth manager Ross Gerber told Yahoo Finance. Apple says it can’t access the data HomeView processes.—ML

      

Reader Poll

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IT’S WINE O’CLOCK NOWHERE

Niv Bavarsky

Three-buck chuck devotees finally have a chance to refine their oenological palate while staying in their preferred price range thanks to California’s wine crisis. Struggling with a historic glut amid slumping demand, the state’s winemakers are offloading fine wines to retailers like Costco that sell them under private labels at steep discounts, the Los Angeles Times reported recently.

For example, one premium cab sav bottle that could typically fetch up to $85 is now going for $9.99 at a national grocery chain, according to its wine buyer.

The great winecession

The state’s $84 billion wine industry is battered as national sales fell to a 20-year low last year, which experts attribute to young people drinking less and many boomers ageing out of the habit of having a bottle of red with dinner. Plus, Canada’s ongoing boycott of US booze cost California’s winemakers $357 million last year, according to the Wine Institute.

This year might be even worse:

• About half of California’s grape harvest was contracted for sale as picking season began this summer, compared with 70-80% in a normal year.
• Several large wineries have gone bankrupt in recent months and California vintners are destroying unneeded vines.

Some farmers are ditching grapes…for other crops like pistachios, almonds, and olives. Others are pivoting to growing agave, with plans to distill it into tequila-inspired liquor. While tequila has faced resilient demand and some California agave growers believe the US version will take off, experts caution that it’s a risky bet on a plant that takes five years to ripen.—SK

      

Sam’s stock of the week

Why investors are swiping right on Bumble again

Illustration: Morning Brew Inc., Photos: Adobe Stock

On Wednesdays, the Brew’s Sam Klebanov highlights a fascinating stock, commodity, or other asset that’s worth your attention.

Bumble is rebounding harder than someone who redownloaded the app after getting ghosted by their situationship. Shares of the embattled dating app skyrocketed 57% yesterday after the company said it agreed to be taken private by a Silicon Valley investment fund in a deal that values it at $1.3 billion. The stock is up 137% since last week.

News of an acquisition suitor comes as the company—once hyped for promising to make online dating more pleasant for women—deals with singles souring on swiping:

• Yesterday’s post-stock-surge market cap of $911 million is a small fraction of the $14 billion valuation that followed Bumble’s buzzy IPO in 2021.
• Bumble had 16% fewer paying users in Q2 compared with last year, while its revenue dropped 15%.

In an attempt to reverse losses, the app ended its signature rule that women DM first this year.

Meanwhile…Bumble’s competitor Match Group—which owns Tinder and Hinge—is trying to woo dating app cynics with in-person events.—SK

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News

What else is brewing

• Pope Leo XIV was diagnosed with lung cancer following a successful surgery to remove a small nodule, the Vatican said. Oncologists said his prognosis was “excellent.”
• OpenAI said it discovered a “sophisticated recording device” hidden in its office that it believes was planted by an employee. It referred the matter to the FBI.
• Netflix will stream the 2030 FIFA World Cup exclusively in Spain and Andorra. Broadcast rights in the US have yet to be determined.
• Martin Shkreli violated his 2022 court order that banned him for life from the pharmaceutical industry, the FTCs and several states alleged yesterday.
• Cornell University suspended fraternity parties for the remainder of the academic year as it investigates allegations of a gang rape at a party in 2024.
• Druski, whose real name is Drew Desbordes, will reportedly become the first digital creator to host Saturday Night Live next month.
• Girls is returning to HBO next year for a five-episode run with the majority of the original cast, the network announced. Now that’s good soup.

recs

• The best albums of 2026, ranked by production quality.
• The first trailer for Greta Gerwig’s The Chronicles of Narnia adaptation.
• Safe ways to treat adult acne.
• Level up your baking game with this KitchenAid bundle.**

^{*A message from our sponsor. **This is a product recommendation from our writers. When you buy through this link, Morning Brew may earn a commission.}

Play

Word Search: How well can you tell one red rock from a different kind of red rock? This week’s theme is birthstones. Play the Word Search here.

Space trivia

NASA’s Perseverance rover, which landed on Mars in 2021, just set the record for distance driven in the solar system (outside Earth). Can you guess how many miles it’s driven?

Answer

28.1 miles

Word of the Day

Today’s Word of the Day is: torrent, meaning “a fast, violent, or heavy stream.” Thanks to Blake from San Diego, CA, for the suggestion. Submit another Word of the Day here.