DOJ Launches Dual Antitrust Probes into Nvidia

The U.S. Department of Justice (DOJ) has initiated two separate investigations into Nvidia, focusing on antitrust concerns related to the company’s AI-driven business activities. These probes aim to scrutinize Nvidia’s acquisition strategies and market practices in the rapidly growing field of artificial intelligence.

The first investigation, reported by Politico, will delve into Nvidia’s recent acquisition of Run, an Israeli startup specializing in GPU management software. Nvidia reportedly spent $700 million in April to acquire Run.

While the DOJ has not disclosed specific concerns regarding this purchase, it falls under the broader lens through which U.S. and international regulators have been examining large tech acquisitions. The scrutiny is particularly intense for AI-related deals, given the potential for anticompetitive practices and market monopolies.

A joint statement by U.S., EU, and U.K. regulators in July underscored the commitment to safeguarding against unfair competition and deceptive practices within the AI ecosystem.

The second probe, as reported by The Information, responds to complaints from competitors. It will assess whether Nvidia has misused its dominant position in the AI chip market to discourage customers from using products from rival companies. Allegations include Nvidia pressuring cloud providers into exclusive purchasing agreements and overcharging for networking equipment when customers opt for AI chips from competitors like AMD and Intel.

Related: US Progressive Groups and Senator Warren Urge DOJ Probe into Nvidia’s AI Chip Dominance

Nvidia’s spokesperson, Mylene Mangalindan, defended the company’s practices in a statement to Politico: “We compete based on decades of investment and innovation, scrupulously adhering to all laws, making Nvidia openly available in every cloud and on-prem for every enterprise, and ensuring that customers can choose whatever solution is best for them. We’ll continue to support aspiring innovators in every industry and market and are happy to provide any information regulators need.”

Nvidia holds an estimated 70 to 95 percent share of the market for chips essential for training AI models. This dominance has not only attracted the DOJ’s attention but has also led to scrutiny from other international regulators. Last month, Reuters reported that Nvidia might face antitrust charges in France for similar anti-competitive practices. Nvidia’s market strength was highlighted in June when it briefly surpassed Microsoft to become the world’s most valuable company, a milestone driven by surging demand for AI technology.

These investigations could significantly impact Nvidia’s operations and the broader AI industry, as regulators continue to address the challenges posed by the concentration of power within major tech companies.

Source: The Information