The US Justice Department (DOJ) is examining whether Alphabet’s Google violated antitrust regulations through a deal involving the AI technology of Character.AI, a well-known chatbot developer, Bloomberg reported.

Regulators are assessing whether the tech giant crafted the agreement to avoid formal merger oversight, sources familiar with the investigation told the publication.

In the arrangement made in 2024, Character.AI’s founders returned to Google, and the company obtained a non-exclusive license to utilise the startup’s technology.

The raised concerns among regulators about large tech companies suppressing emerging competitors.

Google is “always happy to answer any questions from regulators,” Peter Schottenfels, a company spokesperson in an emailed statement to the publication said.

“We’re excited that talent from Character.AI has joined the company, but we have no ownership stake and they remain a separate company.”

The Justice Department can investigate whether the deal itself undermines competition, even if it did not require formal review, the report said.

The inquiry is in its preliminary phase, and no accusations of misconduct have been made against Google.

The probe may not lead to any enforcement action, the report added.

Character.AI, recognised for its chatbots that can emulate various personalities or entities, was founded by ex-Google researchers who later rejoined the company with part of their research team.

In August 2024, the publication reported that the deal valued Character.AI at $2.5bn, with investors’ shares bought out and the startup agreeing to a non-exclusive licensing deal for its large language model technology. Character.AI continues to operate as an independent entity.

The probe adds to Google’s antitrust challenges, following court rulings that deemed the company’s dominance in online search and advertising technology markets unlawful.

In the search case, the Justice Department has recommended that Google divest its Chrome browser to foster competition and has requested a judicial ban on Google’s payments for default search engine status, including for AI products. A decision is anticipated this summer.

Earlier in May 2025, Google agreed to pay the State of Texas $1.375bn to resolve data-privacy claims.

"US DOJ probing Google over Character.AI deal" was originally created and published by Verdict, a GlobalData owned brand.

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