DOJ Probes Andreessen Horowitz Over Board Seats at Rivals
▼ Summary
– The US Justice Department is investigating Andreessen Horowitz over whether its partners improperly serve on boards of competing AI companies, with the probe reportedly nearly a year old and possibly ending without action.
– The inquiry centers on Section 8 of the Clayton Act, which bans simultaneous board service at competing corporations, with Ben Horowitz on Databricks’ board and Martin Casado on Fivetran’s, both portfolio companies.
– The investigation began around the Justice Department’s review of Fivetran’s acquisition of dbt Labs, which was cleared unconditionally, and continued after the deal closed.
– This case differs from prior enforcement actions because multiple directors are involved, placing the firm itself under scrutiny, though the law’s application to entities is not fully settled.
– Andreessen Horowitz has close ties to the Trump administration, with co-founder Marc Andreessen donating millions and taking government advisory roles, making the probe a rare examination of a political ally.
The US Justice Department has opened an investigation into Andreessen Horowitz, examining whether partners at the prominent venture capital firm are improperly holding board seats at competing artificial intelligence companies. Bloomberg first reported the probe on Monday, citing sources familiar with the matter.
Those sources indicate the investigation has been underway for nearly a year. Monday’s report marks the first public disclosure of the DOJ’s scrutiny of Andreessen Horowitz. According to the sources, the department has reached no final determination, and the inquiry could ultimately conclude without any enforcement action.
The companies and the board seats
Two portfolio companies sit at the center of the probe. Both offer software designed to help businesses collect, organize, and analyze vast amounts of data.
Ben Horowitz, co-founder of Andreessen Horowitz, serves on the board of Databricks. Martin Casado, a partner at the firm, holds a board seat at Fivetran. The venture firm backs both companies.
Casado also previously held a board position at dbt Labs, which Fivetran acquired in June. The Justice Department spent months reviewing that deal after it was announced in October, the sources said, before clearing it unconditionally.
The board investigation began around the same time as that merger review and continued after the acquisition closed.
What the law says
The legal provision at issue is Section 8 of the Clayton Act, enacted by Congress in 1914 and codified at 15 U. S. C. 19. Antitrust lawyers refer to the practice it targets as an interlocking directorate.
The statute states that “no person shall, at the same time, serve as a director or officer in any two corporations” that compete, where an agreement between them would violate antitrust law.
The law includes exceptions. Banks are exempt, as are companies that fall below certain thresholds for total capital and profits.
Bloomberg reported that investigations of this nature typically conclude in one way: a director relinquishes one of the two board seats.
What the parties said
Spokespeople for Databricks and the Justice Department declined to comment, according to Bloomberg. Representatives for Andreessen Horowitz and Fivetran did not respond to requests for comment.
A Justice Department spokesperson later issued a statement that neither confirmed nor denied the existence of the inquiry, Forbes reported.
“We can confirm that the DOJ under the Trump Administration will continue to prioritize affordability for all Americans across our economy,” the spokesperson said. The Washington Examiner received identical wording.
Earlier cases under the same law
Bloomberg framed the current inquiry as a continuation of enforcement efforts that began under the Biden administration. Before that period, the department rarely invoked the 1914 provision.
Jonathan Kanter, who led the antitrust division at the time, pushed directors to vacate numerous board seats during his tenure.
Ari Emanuel, then chief executive of Endeavor Group Holdings, stepped down from the board of Live Nation Entertainment in 2021. Directors at more than ten other companies gave up seats throughout 2022 and 2023.
A question about firms and individuals
One aspect distinguishes this case from those earlier matters, Bloomberg reported. Multiple individual directors are involved here, which places the firm itself at the center of the question rather than any single person.
The statute applies to entities as well as individuals. A limited number of courts have interpreted it that way, according to Bloomberg. That point remains unsettled, which could give the firm room to contest any allegations the government brings.
The firm and Washington
Andreessen Horowitz has positioned itself closely with the second Trump administration, Bloomberg reported. The firm has also emerged as a significant voice on federal AI policy.
Horowitz and co-founder Marc Andreessen each contributed millions of dollars in 2024 to a group supporting Trump’s candidacy. Later that year, Horowitz gave $2.5 million to a super political action committee backing Democratic candidate Kamala Harris. Both figures come from Bloomberg.
Forbes cited ProPublica reporting that Andreessen donated more than $5 million to groups supporting Trump in 2024. It also cited a New York Times report from May indicating the firm and its co-founders had made $115.5 million in donations ahead of the November midterms, the largest of any donor.
The firm endorsed Trump in the 2024 election, Forbes noted. Andreessen advised him at his Mar-a-Lago estate before the inauguration, telling Business Insider he spent half his time on it.
Andreessen has taken on government advisory roles since. War Secretary Pete Hegseth appointed him to the Pentagon’s Defense Policy Board in June, the Washington Examiner reported. The Washington Post reported in July that the Federal Reserve had also enlisted him to advise on AI.
Forbes placed Andreessen’s net worth at $1.9 billion on Monday afternoon.
Forbes characterized the investigation as a rare instance of the administration examining a political ally. Doug Calidas, a lobbyist who favors AI regulation, told Bloomberg the firm was “probably the most powerful single company that I’ve seen in recent years.”
The firm and its portfolio
Andreessen Horowitz managed $90 billion in assets as of January, Bloomberg reported. It has since closed a $15 billion fund, the largest in its history.
Its AI holdings include the coding company Cursor, which SpaceX acquired this month, and the voice company ElevenLabs.
The firm holds a stake in SpaceX itself, which went public in June. It has also backed OpenAI.
Databricks ranks among the portfolio companies seen as listing candidates. It closed $5 billion last week at a $190 billion valuation. Horowitz has led investments in it since a $14 million round in 2013, Bloomberg reported.
What happens next
The department has not indicated whether it will take action. Its own sources told Bloomberg the inquiry could close without a finding.
The department is separately in settlement talks with Apple over an unrelated antitrust case. Neither Andreessen Horowitz nor Fivetran has commented publicly on the board investigation.
(Source: The Next Web)