The U.S. Department of Justice (DOJ) has ramped up its antitrust investigation into Nvidia Corp., sending subpoenas to the chipmaker and other industry players to scrutinize potential anticompetitive practices. This escalation marks a significant development in the inquiry into Nvidia's dominant position in the artificial intelligence (AI) chip market.
The DOJ's recent move follows earlier efforts where the agency issued questionnaires to gather preliminary information. The shift to subpoenas-legally binding requests for evidence-signals the investigation's advancement towards potentially filing a formal complaint. The primary concern among antitrust officials is whether Nvidia's practices are creating barriers for competitors and penalizing buyers who do not exclusively use its AI chips.
Nvidia's stock, which had previously experienced a dramatic surge in value, saw a sharp decline following news of the subpoenas. On Tuesday, the company's shares plummeted by over 9%, resulting in a staggering $279 billion loss in market value. Despite this setback, Nvidia's stock has more than doubled in value this year, largely driven by the booming demand for its AI processors.
The DOJ's probe has been focused on several key aspects of Nvidia's business operations. Investigators are examining whether Nvidia's recent acquisition of RunAI-an AI computing management software company-could potentially hinder customers from transitioning away from Nvidia's technology. Additionally, there are concerns about whether Nvidia provides preferential treatment in pricing and supply to those who exclusively use its products, thereby stifling competition.
In response to these allegations, Nvidia has defended its market position, attributing its success to the superior performance and innovation of its products. "Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them," the company stated. Nvidia's CEO Jensen Huang emphasized that his company's success is a result of delivering high-quality products that meet customer needs, rather than engaging in anti-competitive behavior.
The investigation has garnered significant attention due to Nvidia's pivotal role in the AI industry. The company, founded in 1993, initially gained prominence for its graphics cards used in gaming but has since evolved into a leading provider of AI chips. Nvidia's technology has become indispensable for major tech firms, including Microsoft Corp. and Meta Platforms Inc., which together allocate more than 40% of their hardware budgets to Nvidia's products.
The DOJ's inquiry also touches on broader regulatory issues concerning access to AI technologies, which are increasingly critical for both economic and national security reasons. As AI technology becomes more integral to various sectors, governments worldwide are intensifying their scrutiny of dominant players in the field.
In recent months, Nvidia has also faced challenges from competitors and delays in its product development. Reports indicated that the company's upcoming Blackwell series of AI chips might face a significant delay due to design issues. Despite these hurdles, Nvidia remains a formidable force in the industry, with analysts projecting that the company will achieve approximately $120.8 billion in revenue for the calendar year 2024-surpassing the total sales of its nearest rival, Advanced Micro Devices Inc.
