The U.S. Department of Justice (DOJ) has launched an antitrust investigation into Alphabet Inc.’s (NASDAQ: GOOGL) agreement with artificial intelligence startup Character.AI, according to a report from Bloomberg Law.
The probe seeks to determine whether the deal was structured in a manner intended to circumvent formal merger review procedures.
In 2023, Google signed a non-exclusive licensing agreement with Character.AI, gaining access to the company’s large language model technology. Concurrently, Google also hired Character.AI’s co-founders, Noam Shazeer and Daniel De Freitas—both of whom are former Google employees. While the licensing deal does not involve an ownership stake, the integration of key talent and access to strategic AI assets has attracted regulatory attention.
Citing unnamed sources, Bloomberg Law reports that DOJ antitrust officials are examining whether the arrangement was deliberately crafted to avoid triggering standard merger control thresholds that would typically subject the deal to preemptive regulatory review. The investigation is reportedly in its early stages, and it remains uncertain whether it will culminate in formal enforcement action.
In response to inquiries, a Google spokesperson stated: “We’re always happy to answer any questions from regulators. We’re excited that talent from Character.AI joined the company, but we have no ownership stake and they remain a separate company.”
The scrutiny of Google’s deal with Character.AI comes amid heightened regulatory focus on consolidation and talent acquisition in the fast-evolving generative AI sector. Similar transactions by other tech giants have already drawn antitrust scrutiny. In March 2024, Microsoft reached a $650 million agreement with Inflection AI, which included access to the company’s models and the hiring of its staff. Amazon also drew regulatory attention after it hired the co-founders and several team members of the AI firm Adept in June 2023.
Alphabet is already embroiled in two separate DOJ antitrust lawsuits targeting its dominance in online search and digital advertising. Earlier this month, the Federal Trade Commission endorsed the DOJ’s proposal requiring Google to share search data with competitors—part of ongoing efforts to curb the company’s market power.
As generative AI becomes a central battleground for competition in the tech industry, regulators appear increasingly determined to monitor the strategic maneuvers of dominant platforms. The outcome of the DOJ’s probe into Google’s collaboration with Character.AI may have broad implications for how AI-related partnerships are structured and reviewed in the future.
