Alphabet Inc.’s Google is under scrutiny from the U.S. Department of Justice (DOJ) over a licensing agreement it struck with artificial intelligence startup Character.AI, according to a report by Bloomberg Law. The investigation centers on whether Google’s arrangement with the AI company may have skirted federal merger review procedures and violated antitrust laws.
The DOJ’s probe is part of a broader push by U.S. regulators to examine the growing influence and consolidation of power among major tech firms in the rapidly evolving AI sector. According to sources familiar with the matter, antitrust officials are investigating whether Google intentionally structured the deal to avoid the regulatory requirements typically associated with acquisitions or mergers.
In 2023, Google signed a licensing agreement with Character.AI, granting it a non-exclusive right to use the startup’s large language model (LLM) technology. The deal enabled Google to integrate Character.AI’s chatbot capabilities into its own AI offerings, further boosting its position in the competitive generative AI race.
The situation raises additional questions as Google also hired Character.AI’s co-founders, Noam Shazeer and Daniel De Freitas — both former Google engineers. The timing and nature of their rehiring have drawn the attention of regulators, given their pivotal role in developing advanced AI technologies.
Character.AI has garnered considerable attention in the AI space for its customizable chatbot platform that allows users to interact with AI personas ranging from historical figures to fictional characters. The company’s partnership with Google was seen as a major validation of its technology, but it has now attracted the attention of federal watchdogs.
Legal experts suggest that if the DOJ finds that the deal was structured to bypass merger laws, Google could face legal action or be required to alter or unwind the agreement.
This probe reflects the growing concern among regulators that tech giants are using licensing arrangements and personnel acquisitions to sidestep antitrust laws, particularly in emerging sectors like artificial intelligence. As scrutiny intensifies, other tech firms may also face heightened oversight in their AI-related deals.
