Eugenia Kuyda launched Replika AI in 2017 as an empathetic digital companion to combat loneliness and provide emotional support. The platform surged in popularity during the COVID-19 pandemic, offering non-judgmental support to isolated users. By 2023, Replika boasted 10 million users, with 40% engaging in romantic partnerships with their Replikas. Kuyda's strategy of prioritizing users' emotional well-being over engagement metrics was successful: 85% users reported improved mood post-interaction. However, as users ventured into more intimate conversations with the AI, Kuyda faced a pivotal decision: Should she restrict these exchanges or embrace them as the platform's natural evolution? This choice was complicated by the need to safeguard Replika's brand, prevent misuse, while satisfying its diverse user base. The case explores the ethical boundaries of AI-human relationships and the evolving role of AI in addressing loneliness. It is suitable for courses in technology, entrepreneurship, AI, and ethics.