Google reportedly faces a fresh Justice Department probe over whether it violated antitrust law through its partnership with artificial intelligence chatbot firm Character.AI.
DOJ officials informed Google that they are investigating whether it purposely structured a deal with Character.AI last year to avoid regulatory scrutiny.
The Big Tech giant hired key members of Character.AI engineering team – including its co-founders – and secured a non-exclusive license to use its chatbot technology.
“We’re always happy to answer any questions from regulators,” a Google spokesperson said in a statement. “We’re excited that talent from Character.ai joined the company but we have no ownership stake and they remain a separate company.”
The DOJ declined to comment. Character.AI did not immediately respond to a request for comment.
Google has not been accused of any wrongdoing, people familiar with the matter told Bloomberg, adding that the probe was in its early stages and wouldn’t necessarily result in an enforcement action.
Both of Character.AI’s co-founders, Noam Shazeer and Daniel De Freitas, are former Google employees who have now returned to the company.
The DOJ probe is the latest legal headache for both Google and Character.AI, whose chatbot impersonates characters that can have lifelike conversations with users.
Character.AI is in the midst of a high-profile wrongful death lawsuit filed by the mother of 14-year-old son Sewell Setzer III, who committed suicide.
The lawsuit alleges that Character.AI’s chatbot created a character patterned on the HBO series “Game of Thrones” that pulled the teen into emotionally and sexually abusive relationship that eventually led to his death.
Earlier this week, a federal judge allowed the lawsuit to proceed while shooting down Character.AI’s argument that it was protected by the First Amendment.
Meanwhile, Google has lost two historic antitrust cases brought the DOJ – one aimed at its online search empire and another focused on its digital advertising technology.
In both cases, federal judges are considering remedies that could include a breakup of the company.
A decision in the search case is expected by August and could force Google to sell off its Chrome web browser.
The DOJ has asked US District Judge Amit Mehta, who is presiding over the search remedies, to consider long-term implications of Google’s AI products when considering how best to end its monopoly over search.
Google’s deal with Character.AI has drawn comparisons to so-called “acqui-hire” transactions that have gained popularity in Silicon Valley as regulators in the US and abroad step up their scrutiny of tech firms.
Some critics argue that the deals allow tech firms to quietly disarm startups before they can threaten their businesses.
Last year, the United Kingdom’s competition watchdog opened a probe into Microsoft’s mass hiring of employees from Inflection AI – but ultimately cleared it.
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