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:
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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.
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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.
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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.
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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.
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Industry Trend: Similar AI talent and technology acquisition strategies have been employed by:
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Microsoft, which paid $650 million to license Inflection AI’s models and onboard its team.
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Amazon, which hired Adept’s co-founders and staff in 2023.
Both deals have also drawn regulatory interest.
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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.