The U.S. Department of Justice is investigating whether Google, a subsidiary of Alphabet, violated antitrust laws through its agreement with Character.ai, which allows the tech giant to use the startup's artificial intelligence technology.
According to the report, antitrust officials recently informed Google that they are examining whether the company structured the agreement with Character.ai in a way intended to avoid formal government scrutiny of merger deals, based on sources familiar with the matter.
Non-exclusive licensing deal
Last year, Google signed a licensing deal with Character.ai granting it a non-exclusive license to use the large language models technology developed by the chatbot company.
Google's response to the investigation
A Google spokesperson said: We are always ready to answer any inquiries from regulators, and we are excited to welcome talent from Character.ai to the company, but we do not hold any ownership stake in it, and it remains an independent company.
The report indicated that the Department of Justice could investigate whether the deal itself is anti-competitive even if it does not require formal review, adding that the investigation is still in its early stages and may not lead to legal action.
Microsoft and Amazon deals under scrutiny
In March 2024, Microsoft made a $650 million deal with Inflection AI to use its models and hire its employees.
Amazon also hired the founders of Dealt and some members of its team last June, and both deals have undergone regulatory scrutiny.
Ongoing cases against Google's dominance
Google is already facing pressure from regulators as the Department of Justice seeks to dismantle the company's dominance in the online search and digital advertising markets through two separate cases.
Earlier this month, the U.S. Federal Trade Commission supported the Department of Justice's proposal to compel Google to share search data with competitors.
