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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.

Alphabet Shares Surge Nearly 4% on AI Mode Rollout and Monetization Strategy

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Alphabet’s stock jumped 4% on Thursday, reaching its highest level in nearly three months, as investors responded positively to the company’s latest artificial intelligence (AI) initiatives announced at its annual developer conference.

The boost follows Google’s unveiling of “AI Mode”—a major update that allows users across the U.S. to toggle their search experience into an AI-powered interface. The new feature is designed to deliver more conversational and complex answers, positioning Google more competitively against AI-driven platforms like OpenAI’s ChatGPT.

Key Highlights:

  • AI Mode Launch:
    Now available to all U.S. users, AI Mode redefines traditional search by integrating generative AI responses directly into Google Search.

  • Monetization Strategy:
    Google also introduced a premium $249.99/month subscription plan aimed at power users, which could help offset the high infrastructure costs of AI development. Analysts expect further monetization of AI Mode to follow soon.

  • Market Response:
    Alphabet’s Class C shares rose 4% to $175.27, reaching levels not seen since February. Despite Thursday’s rally, the stock remains down about 7% year-to-date.

  • Analyst Confidence:
    Citi analyst Ronald Josey stated the updates reflect improving execution and offer reassurance that “Google can deliver continued search growth while ramping monetization.”
    He also noted that AI Mode could enable more targeted and relevant advertising, the backbone of Google’s revenue model.

Strategic Context:

Google CEO Sundar Pichai emphasized that the rise of generative AI does not entirely cannibalize traditional search. Instead, AI capabilities are expanding the types of queries users bring to Google, offering opportunities for deeper engagement and smarter ad placements.

Executives noted that more challenging user questions, which are often difficult to answer using traditional search algorithms, are now within reach thanks to AI—a potential goldmine for ad monetization and user retention.

Outlook:

With Alphabet doubling down on AI integration and monetization, analysts and investors are signaling increased confidence in the company’s ability to maintain leadership in search while competing in the evolving AI landscape.

UAE’s ‘Stargate’ AI Megaproject to Launch in 2026 with 100,000 Nvidia Chips

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A landmark AI infrastructure project in Abu Dhabi, dubbed Stargate UAE, is set to begin operations in 2026, becoming one of the largest and most advanced artificial intelligence data centers outside the United States. The project will be powered by an estimated 100,000 Nvidia chips, marking a significant step in the UAE’s ambition to become a global AI superhub.

The 1-gigawatt first phase is part of a broader 5-gigawatt, 10-square-mile site and represents the first outcome of a U.S.-brokered deal led by President Donald Trump. The partnership involves a collaboration between UAE’s state-backed G42, and major U.S. and Japanese tech firms: OpenAI, Oracle, Nvidia, Cisco Systems, and SoftBank.

Key Highlights:

  • Launch Timeline:

    • First phase (200MW) to be operational by 2026

  • Hardware:

    • Uses Nvidia Grace Blackwell GB300 systems, Nvidia’s most powerful AI chips

    • TrendForce estimates point to 1,400 servers, each with 72 chips, totalling ~100,000 chips

  • Scale:

    • Part of a 5-gigawatt megaproject to house the largest AI infrastructure outside the U.S.

    • Located on a 26 sq-km site in Abu Dhabi

  • Purpose:

    • Will allow UAE government bodies and businesses to access cutting-edge generative AI models

    • Positioned as a “first-in-the-world platform”, according to Oracle’s Larry Ellison

U.S. Policy Reversal

The announcement follows a significant policy shift by the Trump administration, which reversed Biden-era restrictions on exporting advanced AI chips to the UAE due to concerns over the country’s ties to China.

The U.S. Commerce Department will oversee a bilateral working group with the UAE to ensure compliance with:

  • National security standards

  • Ethical AI deployment

  • Global oversight of AI infrastructure

Strategic Implications

  • Geopolitical Impact:

    • The project cements UAE’s growing alignment with U.S. tech interests, even amid global tensions over AI dominance

    • Could challenge China’s AI influence in the Middle East and Africa

  • Commercial Influence:

    • Strengthens partnerships between OpenAI, Nvidia, and Oracle, anchoring them in the Gulf region

    • Offers a new AI deployment and monetization model based on national infrastructure rather than global cloud platforms

  • Regional AI Race:

    • The Stargate initiative follows Saudi Arabia’s recent moves to create its own multimodal Arabic LLMs

    • Marks a regional AI arms race underpinned by state-backed funding and global tech partnerships