Written by: Josh Sisco, Natasha Mascarenhas, Sarah Frier, Bloomberg
Compiled by: Saoirse, Foresight News
According to informed sources, the U.S. Department of Justice has initiated an antitrust investigation into venture capital firm Andreessen Horowitz (a16z). The core issue is whether the firm's investment partners have improperly held board positions at competing artificial intelligence companies. The sources requested anonymity as the matter is not public.
a16z's San Francisco office building. Photo: Smith Collection/Gado/Archive Photos
The companies involved are Databricks Inc., one of the world's highest-valued private tech companies, and Fivetran Inc., both backed by Andreessen Horowitz. a16z co-founder Ben Horowitz serves on Databricks' board, while partner Martin Casado is on the board of Fivetran. Both companies have the same core business: providing services for collecting, organizing, and analyzing massive amounts of enterprise data.
Martin Casado also previously held a board position at dbt labs, a company in the same sector that was acquired by Fivetran in June. Sources indicated that the Justice Department conducted a months-long review of this acquisition, which was announced in October last year, and ultimately approved the deal unconditionally.
Sources said this nearly year-long investigation, which has not been previously disclosed, began roughly around the same time as the merger review. The investigation has continued even after the acquisition was completed.
Spokespeople for Databricks and 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 resolution in such investigations is to require the director to resign from the board of one of the competing companies. This approach was used in multiple similar cases during the Biden administration, involving directors from more than a dozen companies, including Live Nation Entertainment Inc., who chose to step down to resolve the conflict of interest.
Ties to the White House
The investigation into Andreessen Horowitz has garnered particular attention due to the firm's close ties to the second Trump administration. The firm has established connections with the White House, and its technology investment portfolio stands to benefit from more relaxed regulatory policies. Members of the Andreessen Horowitz team are actively lobbying in Washington to promote such policies.
According to Bloomberg, in 2024, Ben Horowitz and fellow co-founder Marc Andreessen each donated millions to groups supporting then-presidential candidate Donald Trump. The firm is also a significant voice on AI policy, having successfully pushed the current administration to roll back several safety regulations for AI applications. In the latter half of 2024, Ben Horowitz also donated $2.5 million to a super PAC supporting Democratic presidential candidate Kamala Harris.
Informed sources stated that the Justice Department has not yet decided on the next steps for the investigation. It is possible the probe may conclude without any action being taken.
This investigation continues a regulatory focus from the Biden era: reviving the rarely invoked 1914 Clayton Act to combat "interlocking directorates," where an individual or entity holds board seats at two directly competing companies.
Under the leadership of former Assistant Attorney General Jonathan Kanter, the Justice Department repeatedly demanded that relevant directors resign their board positions to eliminate interlock risks. In 2021, Endeavor Group Holdings CEO Ari Emanuel stepped down from the Live Nation board. Between 2022 and 2023, directors at more than a dozen other companies also resigned.
Controversy Over Board Seats at Competing Firms
However, the investigation into Andreessen Horowitz has a particular nuance: the issue is not a single individual, but rather multiple partners from the same firm holding board seats at competing companies. The relevant legal provisions apply to both individuals and entities. While some courts have endorsed this interpretation, Andreessen Horowitz may still use this point to challenge any allegations brought by the government.
As of January this year, Andreessen Horowitz managed $90 billion in assets, making it one of the world's most well-capitalized venture capital firms. The firm recently closed a $15 billion fundraising round, the largest single fundraise in history, to invest in startups across all sectors. Andreessen Horowitz has invested tens of billions of dollars into numerous AI startups, including code development startup Cursor (recently acquired by SpaceX) and voice AI company ElevenLabs. It is also a major investor in SpaceX, which went public in June, and has positioned itself in OpenAI, which plans an IPO soon.
Databricks is another company in Andreessen Horowitz's portfolio with IPO potential. Ben Horowitz has led or participated in funding rounds for Databricks since a $14 million round in 2013, positioning the firm for potential multi-billion dollar returns. Last week, Databricks announced a new $5 billion funding round, valuing the company at $190 billion.
