May 22 (Reuters) - The U.S. Justice Department is

probing whether Alphabet's Google violated antitrust

law in its agreement with Character.AI that allows the tech

giant to use the AI startup's technology, Bloomberg Law reported

on Thursday.

Antitrust enforcers have recently told Google they are

examining whether the company structured the agreement with

Character.AI to avoid formal government merger scrutiny, the

report said, citing people with knowledge of the matter.

Google last year signed a licensing deal with Character.AI

that granted the search engine giant a non-exclusive license to

the chatbot maker's large language model technology.

The company also hired Character.AI co-founders Noam Shazeer

and Daniel De Freitas, both former Google employees.

"We're always happy to answer any questions from

regulators," a Google spokesperson said. "We're excited that

talent from Character.AI joined the company but we have no

ownership stake and they remain a separate company."

Character.AI and the DOJ did not immediately respond to

Reuters requests for comment.

The DOJ can scrutinize whether the deal itself is

anti-competitive even if it did not require a formal review, the

report said, adding the antitrust probe was in the early stages

and may not lead to an enforcement action.

Other tech giants have struck similar deals in the past year

in their push for growth in the heated generative AI race.

Microsoft ( MSFT ) struck a $650 million deal with

Inflection AI in March 2024, to use the AI startup's models and

hire its staff, while Amazon ( AMZN ) hired AI firm Adept's

co-founders and some of its team last June. Both deals had drawn

regulatory scrutiny.

Google is already under pressure from regulators, with the

DOJ seeking to break up the company's dominance in the online

search market and in digital advertising technology in two

separate cases.

Earlier this month, the U.S. Federal Trade Commission backed

the DOJ's proposal to make Google share search data with

competitors.