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DOJ targets a16z board overlap
The U.S. Department of Justice has spent nearly a year investigating whether partners at Andreessen Horowitz are improperly serving on the boards of competing artificial intelligence companies, focusing on Databricks and Fivetran.
“The U.S. Department of Justice has spent nearly a year investigating”
The inquiry centers on Ben Horowitz sitting on Databricks’ board and Martin Casado serving as a director at Fivetran, with regulators examining whether the board representation violates the Clayton Act’s restrictions on interlocking directorates.
Bloomberg reported that the Justice Department reviewed the Fivetran and dbt Labs deal for months after it was announced in October, but ultimately cleared the deal without conditions, while the separate board investigation continued after the acquisition closed.
The probe is tied to the Clayton Act’s 1914 interlocking directorates framework, which the sources describe as barring directors or officers from simultaneously serving at competing corporations.
Spokespeople for Databricks and the Justice Department declined to comment, while Andreessen Horowitz and Fivetran did not respond to requests for comment.
VCs baffled; no final decision
TechCrunch reported that several VCs told it they were surprised by the news of the probe, even as the investigation invokes Section 8 of the Clayton Act and targets board seats at Databricks and Fivetran.
One Databricks investor, speaking on condition of anonymity, told TechCrunch that Databricks and Fivetran were not rivals when a16z invested in the startups, even though they are competitors now.
Bloomberg, as cited by Benzinga, said the DOJ has not made any final determinations regarding the investigation and that it is possible that no action may be taken.
Benzinga also said the DOJ initially looked into the deal in October but "cleared it unconditionally," while the board investigation opened around the same period as the merger review and has continued after the acquisition closed.
The sources also state that the Justice Department has not made a final decision on whether to take enforcement action, leaving open the possibility that the inquiry could end without any formal measures.
What’s at stake for a16z
The investigation’s stakes are framed around whether a16z’s board map creates a conflict of interest under Section 8 of the Clayton Act, with the sources describing the rule as barring a person or entity from serving on the boards of competing companies.
“centers on a16z’s positions at Databricks, valued at $190 billion”
Cadena 3 Argentina said the inquiry centers on a16z’s positions at Databricks, valued at $190 billion, and Fivetran, which merged with dbt Labs in June, with Ben Horowitz on Databricks’ board and Martin Casado on Fivetran’s board.
BigGo Finance reported that Databricks last week announced $5 billion in new funding at a $190 billion valuation, and that Andreessen Horowitz has backed Databricks since its early years with Ben Horowitz leading a $14 million investment in 2013.
The sources also connect the probe to broader enforcement of interlocking directorates, including a revival of the provision under former Assistant Attorney General Jonathan Kanter, when the department pushed directors at more than a dozen companies to give up board seats during enforcement actions in 2022 and 2023.
If enforcement were to require changes, the sources describe a pathway where a partner steps down from one of the boards, with TechCrunch noting that conflicts can be resolved by having a partner step down from one of the boards.