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AI failures expose the risks facing ambitious projects and startups
The article surveys AI products and ventures that have shut down, changed direction or failed to meet expectations, arguing that their setbacks offer lessons for an industry facing high failure rates. The examples show that even major technology companies can misjudge user needs, struggle with technical delivery or decide that separate products work better as features within a larger service.
S&P Global Market Intelligence estimates that about 42% of corporate AI initiatives are abandoned. OpenAI reversed a ChatGPT redesign after users criticised its complexity, while it folded some standalone tools into ChatGPT and shut down its Sora video platform in March 2026. Apple’s promised AI-powered Siri was repeatedly delayed, contributing to a $250 million settlement over iPhone 16 marketing claims. Character.ai, which raised $150 million at a $1 billion valuation, filed for bankruptcy after legal, regulatory and operational difficulties; Google had earlier paid a reported $2.7 billion to license its technology and bring back its founders.
In short
- About 42% of corporate AI initiatives are abandoned.
- OpenAI and Apple have faced setbacks with AI products.
- Character.ai filed for bankruptcy after legal and operational difficulties.
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The case for
The setbacks support the view that ambitious AI projects face unusually high uncertainty: demand may be weaker than expected, technical delivery may lag, and standalone products may work better as features in established services. Delays and closures can reflect responsible course correction, while the reported failures and legal difficulties show why companies and investors should scrutinise claims, execution and user needs.
The case against
Closures and reversals do not by themselves show that AI projects are unusually risky or that the wider industry is failing; they can be ordinary experimentation as companies learn what users want and where products fit. The examples span different causes, and the reported corporate abandonment estimate does not establish how AI initiatives compare with other technology projects or whether the unsuccessful efforts produced useful knowledge.
Explained simply
AI tools are being built by start-ups and large technology companies, but many projects are stopped or changed before they become established products. Some are absorbed into larger services, while others struggle to deliver what users were promised or to attract enough interest.
The key players include OpenAI, which makes ChatGPT; Apple, which has promoted AI features for its iPhones; and Character.ai, a start-up that lets people interact with AI characters. Their experiences show how product design, technical delays, legal rules and running costs can affect a venture, even when it has strong financial backing.
These setbacks matter because companies are investing heavily in AI, while estimates suggest many corporate projects are abandoned. Their outcomes may shape how firms judge demand, make promises to customers and decide whether to continue developing a product.
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Originally published by TechCrunch as “The AI graveyard: a running list of projects and startups that didn’t make it”.