Google Under DOJ Investigation Over Character.AI Agreement Amid Antitrust Scrutiny

DOJ Investigates Google's Deal with Character.AI for Potential Antitrust Violations

The U.S. Department of Justice (DOJ) has launched a probe into Google's agreement with AI startup Character.AI, examining whether the deal may have breached antitrust laws. This inquiry follows concerns that Google structured the agreement to avoid formal government merger scrutiny, according to Bloomberg Law.

Last year, Google entered into a licensing deal with Character.AI, obtaining a non-exclusive license to use the startup's large language model technology. Additionally, Google hired Character.AI co-founders Noam Shazeer and Daniel De Freitas, both former employees of Google. Despite these ties, Google maintains that it does not hold an ownership stake in Character.AI, which remains an independent company.

Antitrust Concerns and Regulatory Context

The DOJ's review focuses on whether Google's deal with Character.AI is anti-competitive, even though the agreement did not trigger a mandatory formal merger review. The investigation is in its early stages, and there is no certainty it will result in enforcement action.

This scrutiny comes amid growing regulatory attention on tech giants' activities in the AI sector. Similar deals have drawn notice from regulators, including Microsoft's $650 million agreement with Inflection AI and Amazon’s hiring of AI firm Adept's co-founders and team members. These moves highlight the competitive pressure among technology companies to accelerate AI capabilities through partnerships and talent acquisition.

Broader Regulatory Pressure on Google

Google is already facing significant regulatory challenges. The DOJ is pursuing two separate cases aiming to break up Google's dominance in online search and digital advertising technology. Recently, the U.S. Federal Trade Commission supported DOJ's proposal requiring Google to share search data with competitors, increasing pressure on the company’s market control.

What This Means for Legal Professionals

• Antitrust enforcers are increasingly scrutinizing not just outright mergers but also strategic licensing agreements and hiring arrangements that may influence market competition.
• Legal advisors should closely monitor evolving regulatory approaches to deals involving AI technologies, as authorities may widen their scope beyond traditional merger reviews.
• Companies engaging in partnerships or licensing agreements in the AI space must consider antitrust implications carefully, even when formal merger filings are not required.

For legal professionals involved in antitrust and technology transactions, this case underscores the importance of thorough compliance checks and strategic planning when structuring agreements with emerging AI firms.

Stay informed on the latest developments in AI and antitrust law by exploring resources such as Complete AI Training's latest AI courses, which offer practical insights for legal and compliance teams.