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U.S. DOJ Probes Google Over Licensing Deal with Character.AI

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The U.S. Department of Justice is investigating whether Google’s licensing deal with AI startup Character.AI violated antitrust laws, according to a report by Bloomberg Law. The probe focuses on whether the deal was deliberately structured to sidestep formal merger review processes.

Key Points:

  • Nature of the Deal: In 2023, Google secured a non-exclusive license to Character.AI’s large language model (LLM) technology and subsequently hired the company’s co-founders, Noam Shazeer and Daniel De Freitas—both former Google engineers.

  • Regulatory Concern: Antitrust officials are questioning if this agreement—despite not involving an acquisition—effectively gave Google undue influence or control over Character.AI’s technology, potentially undermining market competition in the fast-growing generative AI sector.

  • Google’s Response: A spokesperson stated that Google has no ownership stake in Character.AI and that the company remains independent. “We’re always happy to answer any questions from regulators,” the spokesperson said.

  • Ongoing Scrutiny: The probe is at an early stage and may not result in formal action, but it signals heightened regulatory vigilance over AI partnerships. The DOJ can still act if the deal is deemed anti-competitive, even without triggering a formal merger review.

  • Industry Trend: Similar AI talent and technology acquisition strategies have been employed by:

    • Microsoft, which paid $650 million to license Inflection AI’s models and onboard its team.

    • Amazon, which hired Adept’s co-founders and staff in 2023.
      Both deals have also drawn regulatory interest.

  • Broader Context: Google is already facing two major antitrust lawsuits from the DOJ targeting its dominance in search and digital advertising. Earlier this month, the Federal Trade Commission (FTC) supported a proposal requiring Google to share its search data with rivals.

Strategic Implications:

The inquiry reflects regulators’ growing concern that Big Tech may be circumventing antitrust oversight through creative structuring of AI-related partnerships. As companies compete to lead in generative AI, expect increased scrutiny on licensing, hiring, and technology transfer deals that could entrench market power.

Fortnite Returns to Apple App Store in U.S. After Nearly Five-Year Ban

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Epic Games’ Fortnite has officially returned to the Apple App Store in the United States, ending a nearly five-year absence triggered by a high-profile legal battle between the video game developer and the iPhone maker. The reinstatement marks a significant legal and strategic victory for Epic Games.

The return follows a federal court ruling on April 30 that found Apple in violation of a prior court order requiring it to enable more open competition in its App Store, particularly in how apps are downloaded and how in-app purchases are processed. The ruling also stated Apple failed to comply with an earlier injunction and would be referred to federal prosecutors for a criminal contempt investigation.

Apple has not publicly commented on the decision or Fortnite’s reappearance. Epic Games CEO Tim Sweeney simply posted: “We back fam” on X (formerly Twitter), signaling the game’s return.

Background: The Legal Dispute

The dispute began in 2020, when Epic attempted to bypass Apple’s up to 30% commission fee by implementing its own payment system within Fortnite. Apple responded by removing Fortnite from its App Store, prompting Epic to file an antitrust lawsuit.

While the case didn’t yield a full victory for Epic initially, recent court decisions have increasingly favored greater developer rights and payment flexibility, with potential implications far beyond gaming.

Implications for the App Ecosystem

At the time of its removal, Fortnite had over 116 million users on Apple devices alone. Its return, though symbolically important, may not fully recapture its previous popularity.

“This was a hard-fought win that carried a very steep price and may be too late to boost Fortnite, now past its prime,” said Gil Luria, analyst at D.A. Davidson.

However, the broader impact could be more significant. Michael Ashley Schulman, CIO at Running Point Capital Advisors, said the ruling opens the door for subscription-based platforms like Spotify and Netflix to improve their margins and for smaller developers to bypass Apple’s transaction fees altogether. This could lead to a reshaping of iOS economics over the next 12–18 months.

Current Availability

Fortnite is already available on Android devices and iPhones in the European Union, where digital market regulations have forced more openness. In addition to Apple’s App Store, Fortnite is also accessible via the Epic Games Store and AltStore in the EU.

The game’s return to U.S. iPhones signifies not just a platform comeback, but also a critical turning point in the ongoing debate over digital platform control, developer rights, and app store economics.

Apple’s AI-Powered Safari Search Plans Challenge Google’s Online Dominance

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Apple’s move to introduce AI-powered search options in its Safari browser is emerging as a significant challenge to Google’s dominance in online search, with major implications for the tech and digital advertising landscape.

According to reports, Apple is “actively looking at” overhauling Safari by integrating new AI-based search alternatives such as OpenAI and Perplexity AI. This strategy directly targets Google, whose lucrative advertising business heavily depends on iPhone users searching via Safari — a privilege for which it reportedly pays Apple about $20 billion annually.

The development rattled investors, sending shares of Google-parent Alphabet (GOOGL) down 7.3% and erasing nearly $150 billion from its market valuation. Apple’s own stock dipped 1.1% on the same day.

Apple executive Eddy Cue testified during an antitrust case against Google that search activity on Safari had declined last month for the first time, as more users began relying on AI tools for information. This trend, if sustained, could mark a fundamental shift in consumer behavior — away from traditional keyword search engines and toward conversational AI and generative search technologies.

Google responded by asserting it continues to see growth in total search queries, including those from Apple devices, attributing the increase to tools like voice and visual search and newer features like “AI Overviews” that summarize results at the top of the search page. The company also plans to integrate its Gemini AI model into Apple devices through a potential deal expected by mid-2025.

Still, analysts warn that the end of Google’s default search position on Safari could have serious repercussions. Gil Luria of D.A. Davidson noted that if advertisers begin shifting budgets to competing AI-driven search engines, Google’s market share and revenue could suffer substantially.

Meanwhile, platforms like ChatGPT and Perplexity are gaining traction rapidly. ChatGPT, for instance, logged over 1 billion weekly searches in April and reported more than 400 million weekly active users in February.

The U.S. Department of Justice, which has filed multiple antitrust suits against Google, proposes banning exclusive deals like the one between Apple and Google as part of broader efforts to increase competition in the search market.

As generative AI reshapes how people seek and consume information, Apple’s Safari updates could open the door to a new era of search — one where Google is no longer the default.