New York: The U.S. Department of Justice (DOJ) is investigating whether Alphabet Inc.’s Google violated antitrust laws through its recent agreement with AI startup Character.AI, Bloomberg Law reported on Thursday.
According to sources familiar with the matter, antitrust regulators have raised concerns that Google may have structured the deal with Character.AI to avoid triggering a formal government merger review. The probe focuses on whether the licensing arrangement and related hiring of Character.AI’s co-founders by Google circumvented regulatory scrutiny.
Last year, Google signed a licensing agreement granting it a non-exclusive license to use Character.AI’s large language model technology. The search giant also recruited Character.AI co-founders Noam Shazeer and Daniel De Freitas, who previously worked at Google.
“We’re always happy to answer any questions from regulators,” a Google spokesperson said. “We’re excited that talent from Character.AI joined the company but we have no ownership stake and they remain a separate company.”
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Character.AI did not immediately respond to requests for comment, while the DOJ declined to comment.
While the agreement did not require a formal merger review, the DOJ has the authority to examine whether the deal is anti-competitive. Bloomberg Law noted that the investigation is in its early stages and may not result in enforcement action.
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The scrutiny of Google’s deal comes amid a wave of similar transactions in the competitive generative AI sector. Microsoft reached a $650 million agreement with AI startup Inflection AI in March 2024, licensing technology and hiring its team. Amazon also recruited co-founders and key staff from AI firm Adept last June. Both deals have attracted regulatory attention.
Google faces mounting pressure from regulators beyond this probe. The DOJ is pursuing legal action aimed at breaking up Google’s dominance in online search and digital advertising technologies. Earlier this month, the Federal Trade Commission supported the DOJ’s proposal to require Google to share search data with competitors.
