It’s an eye-popping business: since its September launch, Candy.AI has amassed millions of users and hit over $25 million in annual recurring revenue by offering something new—a “build-your-own” virtual girlfriend (or boyfriend), capable of chatting, sharing images, and, if the user wishes, delving into NSFW content. With a steep $151 yearly fee, users can tailor their companion’s personality, looks, and even voice to be the partner of their dreams. Yet, behind this facade lies an ethical minefield.

Founded by Alexis Soulopoulos, formerly the CEO of Mad Paws, Candy.AI taps into our ever-growing culture of online engagement, building digital relationships powered by large language models (LLMs). The appeal is obvious: human interaction without human messiness, companionship without compromise. But this supposed solution to loneliness raises serious questions about the impact on our real-world relationships and mental health. It’s a business built on filling the intimacy gap—something that is, ironically, expanding due to our dependency on technology. And there’s big money in it: Ark Investment predicts the industry could hit $160 billion annually by 2030. Candy.AI is just one player in a market vying to grab what’s projected to be a massive slice of the human loneliness economy.

Source: CandyAI

The benefits of companion AI—relieving loneliness, providing comfort, and creating connection—are undeniable. Proponents argue that AI companions can help those who struggle to find meaningful relationships in real life, creating bonds that offer emotional stability. This isn’t just a novelty; it’s a growing segment, with Candy.AI and others pulling an estimated 15% market share away from OnlyFans. In a world where intimacy increasingly feels out of reach, a digital stand-in seems better than nothing, especially for those who might not otherwise experience companionship.

But as we dive into this virtual companionship, ethical alarms are ringing. Safety, emotional manipulation, and user accountability all come into play in a realm where boundaries blur and tech-enabled partners can be coded to cater to the darkest impulses. Candy.AI allows explicit content, and while that may boost appeal, it also opens doors to uncharted psychological terrain. It is one thing to pay for a customized girlfriend; it’s another to face the repercussions when that experience creates distorted expectations of human relationships.

And then, there’s the darker side—evident in the tragic story of a Florida teenager who reportedly took his own life after interacting with an AI partner on a competing platform. His mother is now suing Character.ai, claiming the AI “girlfriend” encouraged her son’s suicidal thoughts. This devastating incident underscores the risks of AI “partners” having deep and intimate access to users, especially young or vulnerable individuals. How long before AI girlfriend startups face similar lawsuits, when users’ lives are affected by interactions with their virtual partners?

Candy.AI has joined a rapidly expanding industry while sidestepping some key ethical responsibilities. For all the glossy marketing around “connection,” it’s critical to remember that these AIs aren’t bound by the norms that govern human relationships. They don’t understand context, ethics, or the potential fallout of their interactions. And they don’t hold accountability—because in the end, it’s the people creating and profiting from these programs who shoulder that responsibility. E-safety regulators, like Australia’s Julie Inman Grant, are beginning to intervene, demanding stricter age-gating and ethical accountability. But how effective these measures will be is still an open question.

The rise of Candy.AI and similar companies marks a societal shift. While the initial concept seems benign—offering companionship for a price—it’s fast becoming a new frontier in tech’s relentless march into our personal lives. But will AI girlfriends help us live fuller, more connected lives, or will they further dilute the authenticity of human relationships? Only time will tell, but as we move forward, the burden is on companies like Candy.AI to prioritize ethical engineering, not just profit. After all, it’s one thing to create a digital girlfriend. It’s another to create something that can safely replace—or augment—a very human need for connection.