The recent AI boom has generated not only record valuations and capital inflows, but also a veritable "graveyard" of projects that failed to find a sustainable place in the market. According to S&P Global Market Intelligence analytics, referenced by RBC-Ukraine, nearly half of artificial intelligence initiatives ultimately fail due to lack of funding, technical problems, or a lack of real demand. The list of failures includes both independent startups that raised hundreds of millions of dollars and individual products from major tech corporations that were shut down or postponed after failing to meet expectations.
Character.ai: From Billion-Dollar Valuation to Bankruptcy
One of the most striking examples of crisis trends is the fate of the Character.ai platform. The startup, which gathered millions of users and achieved a billion-dollar valuation, faced a series of lawsuits related to adolescent safety and increasing regulatory pressure. After the company lost its key founders to Google, Character.ai announced bankruptcy. Among potential buyers of its assets, according to reports, is Disney, highlighting that even an operationally failed project can attract major players due to its accumulated audience and technology.
A Wave of App and Service Closures
Parallel to the giant platforms, narrower products were also shutting down. Relay, an AI-based Zapier alternative for workflow automation that existed for about five years, ceased operations in August as similar features were built into major platforms. The audio app Huxe, created by former NotebookLM developers to turn text into podcasts, closed in May under pressure from Spotify's competition. The free platform Yupp, which allowed users to compare responses from over 800 AI models, failed to find a sustainable business model and shut down in the spring. In September, the Notion Mail platform also ceased operations: users, according to the report, preferred to trust email processing to autonomous agents rather than a separate email client.
Hardware Failures: New Form Factors Did Not Catch On
Particularly challenging was the fate of hardware projects attempting to offer fundamentally new user interaction form factors. The Humane AI Pin device, which raised $230 million in investments, closed its business due to performance issues and battery fire risks; the startup's assets were acquired by HP. The Rabbit R1 gadget followed a similar trajectory: it formally continued to receive updates, but received devastating user reviews due to its incompleteness and unstable performance. Both cases demonstrate that a "new form factor" alone, without mature AI capabilities, cannot retain audience interest.
The Retreat of Tech Giants
A significant share of failures fell on major corporations. OpenAI was forced to abandon the controversial idea of combining interfaces into a "super-app," as well as shut down the ChatGPT Atlas browser project and the Sora video platform due to high development and support costs. Apple delayed the release of the updated Siri assistant for a long time due to technical difficulties, which reportedly led to millions in compensation payouts to users. Microsoft's Recall feature faced harsh criticism over privacy threats, forcing the company to postpone its launch and overhaul its security system. The combination of these decisions shows that even well-resourced players can have AI products fail tests of real demand and regulatory requirements.
The takeaway from S&P Global Market Intelligence analytics boils down to a simple conclusion: in the AI race, those who survive are not the ones who make the loudest announcements, but those who find a sustainable business model, ensure reliability, and avoid regulatory barriers. The rest — from billion-dollar startups to experimental giant gadgets — are joining the list of projects whose lives turned out shorter than expected.
