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DOJ Opens Antitrust Probe of Google’s AI Partnership with Character.AI

By  |  May 22, 2025
DOJ Opens Antitrust Probe of Google’s AI Partnership with Character.AI

The U.S. Justice Department has launched an inquiry into whether Alphabet Inc.’s Google skirted antitrust laws when it struck a deal last year to incorporate the artificial-intelligence technology of Character.AI, per Bloomberg. The early-stage civil probe is examining whether the arrangement was structured to avoid a formal government merger review, according to people with knowledge of the investigation.

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    Under the agreement, the founders of Character.AI joined Google, and the search giant secured a non-exclusive license to deploy the startup’s large-language-model technology. While Silicon Valley has praised such talent-acquisition deals as efficient means to absorb expertise, regulators worry that dominant firms may use these arrangements to stifle emerging competitors.

    A Justice Department spokesperson declined to comment on the record. Character.AI did not respond to requests for comment. However, Google spokesperson Peter Schottenfels said via email, “We’re excited that talent from Character.Ai has joined the company but we have no ownership stake and they remain a separate company.” He added that Google is “always happy to answer any questions from regulators.”

    Read more: Character.AI Founders Rejoin Google in Major Licensing Deal Amid AI Antitrust Concerns

    The antitrust review comes amid a broader federal push, begun under the Biden administration, to scrutinize competition in the rapidly evolving AI sector. Enforcers are particularly focused on whether partnerships between tech giants and AI startups give established players an undue edge as the technology advances.

    Bloomberg reported in August that, as part of the deal, investors in Character.AI would be bought out at a valuation equivalent to roughly $2.5 billion, according to Bloomberg. Despite the transaction, Character.AI continues to operate independently and retains ownership of its intellectual property under a non-exclusive licensing arrangement with Google.

    This probe marks the latest front in the government’s antitrust battle against Google. In separate litigation targeting Google’s dominance in online search and digital advertising, the Justice Department has pushed for dramatic remedies, including a possible spin-off of the Chrome browser and restrictions on default search-engine payments.

    Source: Bloomberg