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The big picture: It's been a whirlwind year for Nvidia, the tech juggernaut that's become virtually synonymous with AI computing hardware. From superb revenue figures to CEO Jensen Huang's headline-grabbing antics, the company has been in the spotlight for months. Now, the headlines grow sour as Nvidia has caught the eye of US antitrust regulators.
According to a report from The Information, the US Department of Justice has launched a probe into whether Nvidia engaged in anti-competitive business tactics to maintain its grip on the AI processor market after complaints from competitors. Investigators will investigate whether the company threatened to cut off or delay orders for customers buying AI chips from rivals like AMD, Intel, or smaller startups. If proven true, such strong-arming could clearly stifle competition and narrow customer choices in the burgeoning AI space.
Of course, Nvidia denies any foul play. A spokesperson told Reuters that the company "competes based on decades of investment and innovation, scrupulously adhering to all laws" while fairly allocating GPUs across all customers. Nvidia promised to cooperate fully with the DoJ's investigation.
Regulators are also investigating claims that Nvidia strong-armed cloud providers into bundled purchases, like having to buy Mellanox networking gear alongside Nvidia's A100 or H100 AI chips.
The Justice Department has reportedly contacted Nvidia's rivals, including AMD, to obtain information that corroborates the complaints. All this scrutiny is likely the culmination of progressive watchdogs and Senator Elizabeth Warren keeping the heat on the DoJ.
It's no wonder regulators are watching Nvidia's actions so closely now. By some estimates, the company commands a staggering 80-percent share of the AI processor market. It even briefly became the most valuable company in the world, outshining Apple, back in June. With that level of dominance, even minor missteps could have significant ripple effects across the entire industry.
The US probe falls on the heels of another antitrust investigation by French authorities over similar allegations. Regulators are also concerned about Nvidia's investments in certain AI cloud firms.
Politico reported on Thursday that the DoJ's probe extends to Nvidia's roughly $700 million buyout of Israeli AI startup Run:ai. The acquisition raised eyebrows, given that Run:ai's tech for optimizing AI infrastructure could further beef up Nvidia's capabilities.