Google, Anthropic Deal In Jeopardy As US Justice Department Looks To Snap Online Search Monopoly

Regulators are looking to block Google from investing $2 billion in Anthropic, a Jeff Bezos-backed rival to artificial intelligence (AI) innovator OpenAI.

What Happened: The U.S. Department of Justice (DOJ) recommended in a court filing Wednesday that Alphabet Inc‘s GOOG GOOGL Google divest its Chrome browser to dismantle its monopoly on online search.

It doesn’t end there. Google should be barred from doing any deals with companies that control where consumers search for information, regulators say. That includes AI products. This puts Google's Anthropic investment at risk, according to Bloomberg, citing unnamed sources.

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Google boasts over 91% global market share when it comes to online search, per GlobalStats. 

Why It Matters: Google needs Anthropic, or startups like it. Without it, Google is at a disadvantage, considering every major tech company is essentially in an AI arms race.

Since OpenAI’s ChatGPT launch in late 2022, tech giants have heavily invested in AI startups.

But Google’s Anthropic deal is raising concerns overseas as well.

Last month, U.K. antitrust officials announced an investigation into whether Google’s pursuit of Anthropic could harm competition.

Meanwhile, Amazon.com Inc. AMZN managed to avoid scrutiny. The UK’s competition regulator recently approved the partnership between Amazon and Anthropic, despite the Seattle-based company’s significant $4 billion investment in the company.

Britain’s Competition and Markets Authority (CMA) confirmed the partnership does not fall under its jurisdiction.

Microsoft Corp MSFT also appeased regulators when it relinquished its board observer role at OpenAI. The Redmond, Washington-based company invested over $10 billion in the AI startup.

What’s Next: A decision on whether the UK will require further investigation is expected by Dec. 19.

In the U.S., Google plans to appeal Judge Amit Mehta‘s antitrust ruling in August.

Mehta’s decision could ultimately lead to Google divesting segments of its business, including Chrome.

Price Action: Alphabet was down 4.5% to $169.24 on Thursday.

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