Google in Legal Hot Waters Over Character.AI LLM Deal

The U.S. Department of Justice (DOJ) has launched an antitrust investigation into Google’s recent partnership with Character.AI. This investigation comes on top of increasing regulatory scrutiny that the tech behemoth is currently facing.

The investigation centers on the possibility that Google’s liscencing agreement with the AI chatbot startup was designed to evade formal merger reviews.

Character.AI Partnership Under Scrutiny

Google acquired Character.AI’s large language model technology and onboarded its co-founders, Noam Shazeer and Daniel De Freitas, who were both former Google employees, as part of the agreement. Regulators are currently investigating the structure of the arrangement and its potential impact on competition in the AI sector, despite Google’s assertion that Character.AI is an autonomous entity and that it does not possess any ownership stake.

Broader Antitrust Challenges Facing Google

This probe is part of a larger series of antitrust actions against Google. Earlier this year, a US District Court determined that Google violated antitrust laws by monopolizing the digital advertising market. This prompted the DOJ to seek the divestment of major ad-tech products such as AdX and Google Ad Manager.

Additionally, the Department of Justice has previously filed lawsuits against Google, alleging that the company has monopolized the search and search advertising markets. Trials and potential remedies, such as the dissolution of specific business entities, are currently in progress.

Implications for the Tech Industry

The DOJ’s scrutiny of Google‘s partnership with Character.AI underscores the increasing regulatory focus on major tech companies. Many people in the U.S. are concerned with  emerging AI startups. Which is why similar deals, such as Microsoft’s agreement with Inflection AI and Amazon’s acquisition of AI talent from Adept, have also attracted regulatory attention.

As the investigation unfolds, it remains to be seen whether the DOJ will pursue enforcement actions or if the probe will conclude without further consequences. Nonetheless, the inquiry reflects the heightened vigilance of regulators in overseeing the rapidly evolving AI landscape and the competitive dynamics within it.