Written by: Josh Sisco, Natasha Mascarenhas, Sarah Frier, Bloomberg

Translated by: Saoirse, Foresight News

According to informants, the U.S. Department of Justice is launching an antitrust investigation into the venture capital firm Andreessen Horowitz (a16z), with the core issue being whether the firm's investment partners improperly serve on the boards of competing artificial intelligence companies. The sources, due to the discussion of non-public information, requested anonymity.

a16z San Francisco office building. Photo: Smith Collection/Gado/Archive Photos

The companies involved are Databricks Inc., one of the highest-valued private tech companies globally, and Fivetran Inc., both of which are backed by Andreessen Horowitz. Co-founder Ben Horowitz serves on the board of Databricks, while partner Martin Casado serves on the board of Fivetran. Both companies have the same main business, providing massive data collection, organization, and analysis services for enterprises.

Martin Casado also previously served on the board of the similar company dbt labs, which was acquired by Fivetran in June. Sources indicate that the Department of Justice conducted a months-long review of this acquisition deal, publicly announced last October, ultimately approving the acquisition unconditionally.

Sources said this ongoing investigation, which has lasted for nearly a year, was never disclosed publicly before, and its launch coincides roughly with the aforementioned acquisition review, continuing even after the deal was completed.

Databricks and a spokesman for the U.S. Department of Justice declined to comment; spokespeople for Andreessen Horowitz and Fivetran did not respond to media requests for comment.

The standard approach to handling such investigations is to require directors to resign from the boards of one of the competing companies. Similar cases during the Biden administration have adopted this resolution, with directors from over a dozen companies, including Live Nation Entertainment Inc., choosing to resign to eliminate conflicts of interest.

Connections with the White House

Andreessen Horowitz has had close interactions with the second Trump administration, making the investigation into this firm particularly noteworthy. The firm has established connections with the White House, and its tech investment portfolio stands to benefit from lenient regulatory policies, with some team members actively lobbying for related policies in Washington.

According to Bloomberg, in 2024, Ben Horowitz and co-founder Marc Andreessen each donated millions of dollars to organizations supporting then-presidential candidate Trump. At the same time, the firm is an important voice in the AI policy realm, successfully pushing this administration to withdraw several safety control measures for AI applications. In the second half of 2024, Ben Horowitz also donated $2.5 million to a super political action committee supporting Democratic presidential candidate Kamala Harris.

Informants indicate that the Department of Justice has not yet determined the follow-up handling of the investigation, and it is possible that no action will ultimately be taken.

This investigation continues the regulatory focus of the Biden administration: utilizing a rarely invoked 1914 act to combat the "interlocking directorate" phenomenon, where individuals or entities serve simultaneously on the boards of two directly competing companies.

Under former Assistant Attorney General Jonathan Kanter's leadership, the Department of Justice has repeatedly requested relevant directors to resign to mitigate interlocking directorate risks. In 2021, then-CEO of Endeavor Group Holdings Ari Emanuel resigned from the Live Nation board; between 2022 and 2023, more than a dozen other corporate directors have stepped down sequentially.

Controversy over Board Memberships in Competing Companies

However, the investigation into Andreessen Horowitz has unique aspects: the controversy does not stem from a single individual, but rather several partners from the firm serving on the boards of competing companies. Relevant legal provisions apply to both individuals and entities, and a few courts have recognized this interpretation, but Andreessen Horowitz can still leverage this point to defend against the government's allegations.

As of January of this year, Andreessen Horowitz managed assets of $90 billion, making it one of the most powerful venture capital firms globally. Recently, the firm completed a $15 billion fundraise, the largest single fundraising in history, with the capital targeted towards startups across all sectors. Andreessen Horowitz has invested billions into several AI startups, including the code development startup Cursor, recently acquired by SpaceX, and the voice AI company ElevenLabs. It is also a major investor in SpaceX, which completed its IPO in June, and is planning to launch an IPO for OpenAI soon.

Databricks is also among the portfolio of Andreessen Horowitz, possessing significant potential for an IPO. Since a $14 million funding round in 2013, Ben Horowitz has continuously led investments, holding the potential for billions in returns. Databricks announced last week that it had completed a new funding round of $5 billion, raising its valuation to $190 billion.