Legally, a company can sell personal data about its users if its privacy policy permits the transfer. Character.AI’s privacy policy is spectacularly vague. It says the company may disclose “certain information” in the company’s sale. Nobody knows what that means.
The US Trustee Office, an arm of the Justice Department, wants the judge to appoint a consumer privacy ombudsman to advise the court on user privacy. The judge could restrict the sale of company “records,” including user data.
But here’s the part most people don’t understand: The Bankruptcy Code has no provision specifically addressing trained models. The legal status of LLMs and their training data has yet to be settled in law. That means it’s entirely possible that the data users fed into Character.AI will be sold to whoever buys it.
Character.AI is just one handy example. The larger risk is all the other AI companies out there.
Read the rest at ComputerWorld
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