The US Department of Justice has opened another antitrust investigation into Alphabet, the parent company of Google. Authorities are examining whether the deal between Google and the AI startup Character.AI, which gave Google access to the latter’s technologies, may have violated US antitrust laws.
As part of the deal, Google received a non-exclusive license to use Character.AI’s AI algorithms. In addition, some of Character.AI’s employees—including its co-founders—joined Google. Sources say antitrust regulators have informed Google that they are investigating whether the structure of the agreement was intentionally designed to bypass formal government merger review.
A Google spokesperson commented: “We are always available to answer any questions from regulators. We are pleased that Character.AI‘s talented employees have joined the company, but we do not own any equity, and they remain a separate company.” At this time, Character.AI and the Justice Department have not released official statements.
Early-Stage Inquiry Could Lead to Action
The report notes that the Justice Department may look into whether the deal is anticompetitive even if it did not require formal regulatory review. While the investigation is still in its early stages, it could eventually lead to enforcement measures.
Similar deals in the tech industry have already caught the attention of regulators, reminds NIX Solutions. In March 2024, Microsoft reached a $650 million agreement with Inflection AI, gaining access to its models and onboarding its team. Just a few months later, in June 2024, Amazon hired the co-founders and several team members from another startup, Adept.
These types of partnerships reflect a broader trend in the AI sector, where major tech companies are forming close ties with promising startups. Yet, concerns about competition and regulatory oversight continue to grow alongside these developments.
We’ll keep you updated as the investigation unfolds and more details become available.