According to a Bloomberg Law report, the U.S. Justice Department (DOJ) is investigating whether Alphabet's Google violated antitrust law in its agreement with Character.AI. The probe centers on whether Google structured the deal to avoid formal government merger scrutiny, according to sources familiar with the matter.

Google entered into a licensing agreement with Character.AI last year, securing a non-exclusive license to the chatbot maker's large language model technology. Additionally, Google hired Character.AI co-founders Noam Shazeer and Daniel De Freitas, both of whom previously worked at Google.

A Google spokesperson stated that the company is willing to cooperate with regulators and emphasized that while talent from Character.AI has joined Google, the company has no ownership stake in Character.AI, which remains a separate entity. Character.AI did not immediately respond to a request for comment, and the DOJ declined to comment.

The DOJ has the authority to scrutinize the deal for anti-competitive practices, even if it didn't require a formal review, though the report notes that the antitrust probe is in its early stages and may not lead to enforcement action.

Other tech giants have engaged in similar deals to bolster their generative AI capabilities. Microsoft invested $650 million in Inflection AI in March 2024 to utilize the AI startup's models and recruit its staff. Amazon hired the co-founders and some team members from AI firm Adept in June of the previous year. Both of these deals have also faced regulatory scrutiny.

Google is already facing pressure from regulators, with the DOJ pursuing separate cases to break up the company's dominance in online search and digital advertising technology. Earlier in May, the U.S. Federal Trade Commission supported the DOJ's proposal to require Google to share search data with competitors.