The U.S. Justice Department is investigating whether Google, a subsidiary of Alphabet, has breached antitrust laws through its agreement with Character.AI, which permits the tech company to utilize the startup’s technology, according to a report from Bloomberg Law on Thursday.
Government antitrust officials have communicated to Google that they are looking into the structure of its agreement with Character.AI to determine if it was designed to circumvent formal government merger reviews, as reported by sources familiar with the situation.
In a deal established last year, Google secured a non-exclusive licensing agreement that allows the company to access the large language model technology developed by Character.AI. Additionally, Google has brought aboard co-founders Noam Shazeer and Daniel De Freitas, both of whom are former employees of the tech giant.
A spokesperson for Google 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 entity.”
Character.AI has not yet responded to a request for comment from Reuters, and the Department of Justice has declined to comment on the ongoing investigation.
The DOJ’s inquiry could assess whether the agreement itself is anti-competitive, even without a formal review process, according to the report. The investigation is in its preliminary stages and may not lead to an enforcement action.
In the competitive landscape of generative AI, other technology companies have entered into similar agreements recently. For instance, Microsoft finalized a $650 million deal with Inflection AI in March 2024 to utilize the startup’s models and to hire its personnel. Amazon also recruited co-founders and team members from AI firm Adept last June; both of these arrangements have elicited regulatory attention.
Google is already facing scrutiny from regulators, with the DOJ pursuing actions aimed at dismantling the company’s dominant position in the online search and digital advertising sectors through separate legal cases.
This month, the U.S. Federal Trade Commission supported the DOJ’s suggestion that Google be required to share its search data with competitors.
© Thomson Reuters 2025
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