What were those specific problems they faced? I haven't paid any attention the market for cloud-based AI services by all these non-frontier companies, but I know it's a big market

I heard about various lawsuits, including one where apparently Pennsylvania alleges that a literal AI character has claimed to be a licensed psychiatrist inside of a chat, after the user asked.

It sounds ridiculous to me.

I have never used it but the reputation it has in my bubble is that kids just used it to goon to Disney characters

So the problem is your customers don’t pay for anything and your content is unlicensed