Justice Department scrutinises a16z seats at Databricks and Fivetran
The US Department of Justice has opened an investigation into Andreessen Horowitz over board seats held at Databricks and Fivetran, Bloomberg reported. The inquiry has been under way for nearly a year and centres on whether the venture firm’s board representation conflicts with Section 8 of the Clayton Act.
Ben Horowitz, co-founder of Andreessen Horowitz, serves on Databricks’ board. Martin Casado, a partner at the firm, serves on Fivetran’s board. Databricks is valued at $190 billion, while Fivetran combined with dbt Labs in June.
Competition emerged after the investments
The case rests on the companies’ evolving product overlap. Databricks is widely known for cloud storage products, but its Lakeflow offering has expanded into AI data pipelines and application connectors. Those capabilities are central to Fivetran’s business.
An investor in Databricks said the companies were not competitors when Andreessen Horowitz made its investments. That distinction helps explain why several venture capital investors expressed surprise at the probe: large firms back hundreds of startups, and portfolio companies can pivot or broaden their products until they operate in the same market.
Competition between venture-backed companies is not unusual. Many venture firms have invested in both Anthropic and OpenAI. Board roles, however, bring a more acute issue because directors can receive strategic information unavailable to ordinary investors. The DOJ did not comment, Databricks declined comment, and Andreessen Horowitz did not respond to requests for comment.
Section 8 places board roles in focus
Section 8 of the Clayton Act is a 112-year-old provision that bars an individual or entity from serving on the boards of competing companies. Regulators have rarely applied it to venture capital, making the DOJ inquiry closely watched across the industry.
One potential remedy is for a partner to leave one board. Since separate Andreessen Horowitz partners hold the two seats, the firm could instead establish a so-called Chinese wall that prevents Horowitz and Casado from sharing confidential information about the respective companies.
The scrutiny arrives as competition and commercial boundaries are receiving greater attention across technology, including a possible OpenAI lawsuit against Apple over a possible OpenAI lawsuit against Apple following a failed ChatGPT integration. For founders and investors, the practical implication is to reassess board mandates, portfolio overlap and safeguards for confidential information as companies’ product strategies change.