The Loneliness Industry Perfected Its Business Model
AI companions are generating more than 10x the user sessions that regular AI tools get. Ten times. What's the secret ingredient? They’ll tell you it’s intelligence, but the data will show you: it's sycophancy.
While every professional you know is hustling to prove how they use AI to boost productivity, profitability, and performance, there's a different story playing out with a different demographic. Because the kids - namely 72% of American teens - aren't using AI like busy professionals. They're using it like social media. And that's where The Loneliness Industry has been busy beta testing its next business model.
This isn't just scaled-up social media attention-grabbing. It's socially engineered sycophancy. AI companions are designed to agree, validate, and rarely resist. The platforms deliberately avoid challenging users, creating digital relationships that outcompete human ones by removing all frictions. What American teens have discovered first, is that engineered relationships feel better than real ones because they're programmed to.
The numbers tell the story: 52% of teens are regular AI companion users, 33% use them for social interaction and relationships, and 39% have successfully transferred social skills they practiced with AI to real-life situations. But here's the slightly terrifying tell - one-third have chosen AI companions over humans for serious conversations.
Adults shouldn't feel smug about teen "dependency." Get that out of your head, right away. Because the loneliness epidemic among adults is well-documented, as is workplace isolation and an aging population who is starved for validation. Go to a mall and look around. The new malls, i.e. the platforms, have already proven their product design works. Now they're ready to start scaling it up.
Move fast, break things - remember?
Elon's xAI launched adult companions this week - users can chat with an animated fox and a "goth anime girl in thigh-high fishnet stockings." The dating app companies are pivoting to AI relationships. A new app called Tolan just raised $20 million to match users with "companion bot aliens." If you think this is just getting started, you're missing how much progress has already been made.
As Panoptica's Aleichia Celestina Williams explored in her "My AI Bestie" series, these are agentic relationships designed to hack human connection by offering constant availability and unconditional validation. The 10x engagement rate isn't a bug, it's the entire friggin' feature.
The AI companies figured out the formula on teenagers first. Now they're coming for the rest of us.
Sources: Common Sense Media, "Talk, Trust, and Trade-Offs: How and Why Teens Use AI Companions" (2025); Axios, "Teens flock to companion bots despite risks" (July 16, 2025); Andreessen Horowitz data via Axios
Related: Ben Hunt explored the deeper philosophical mechanics of AI sycophancy in "Beyond Nudge” at Epsilon Theory. And only on the Panoptica Pop-Up: do not miss the series "My AI Bestie" examining what it's like to form genuine emotional connections with AI, from Aleichia Celestina Williams.
