DOJ Subpoenas Nvidia in Expanding AI Antitrust Investigation

DOJ subpoenas Nvidia in deepening AI antitrust probe, report says

DOJ reportedly seeks evidence of alleged unfair supply and pricing of AI chips. The Department of Justice is reportedly deepening its probe into Nvidia. Officials have moved on from merely questioning competitors to subpoenaing Nvidia and other tech companies for evidence that could substantiate allegations that Nvidia is abusing its "dominant position in AI computing," Bloomberg reported. When news of the DOJ's probe into the trillion-dollar company was first reported in June, Fast Company reported that scrutiny was intensifying merely because Nvidia was estimated to control "as much as 90 percent of the market for chips" capable of powering AI models. Experts told Fast Company that the DOJ probe might even be good for Nvidia's business, noting that the market barely moved when the probe was first announced. But the market's confidence seemed to be shaken a little more on Tuesday, when Nvidia lost a "record-setting $279 billion" in market value following Bloomberg's report. Nvidia's losses became "the biggest single-day market-cap decline on record," TheStreet reported. People close to the DOJ's investigation told Bloomberg that the DOJ's "legally binding requests" require competitors "to provide information" on Nvidia's suspected anticompetitive behaviors as a "dominant provider of AI processors." One concern is that Nvidia may be giving "preferential supply and pricing to customers who use its technology exclusively or buy its complete systems," sources told Bloomberg. The DOJ is also reportedly probing Nvidia's acquisition of RunAI -- suspecting the deal may lock RunAI customers into using Nvidia chips. Bloomberg's report builds on a report last month from The Information that said that Advanced Micro Devices Inc. (AMD) and other Nvidia rivals were questioned by the DOJ -- as well as third parties who could shed light on whether Nvidia potentially abused its market dominance in AI chips to pressure customers into buying more products. According to Bloomberg's sources, the DOJ is worried that "Nvidia is making it harder to switch to other suppliers and penalizes buyers that don't exclusively use its artificial intelligence chips." In a statement to Bloomberg, Nvidia insisted that "Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them." Additionally, Bloomberg noted that following a chip shortage in 2022, Nvidia CEO Jensen Huang has said that his company strives to prevent stockpiling of Nvidia's coveted AI chips by prioritizing customers "who can make use of his products in ready-to-go data centers." Potential threats to Nvidia's dominance Despite the slump in shares, Nvidia's market dominance seems unlikely to wane any time soon after its stock more than doubled this year. In an SEC filing this year, Nvidia bragged that its "accelerated computing ecosystem is bringing AI to every enterprise" with an "ecosystem" spanning "nearly 5 million developers and 40,000 companies." Nvidia specifically highlighted that "more than 1,600 generative AI companies are building on Nvidia," and according to Bloomberg, Nvidia will close out 2024 with more profits than the total sales of its closest competitor, AMD. After the DOJ's most recent big win, which successfully proved that Google has a monopoly on search, the DOJ appears intent on getting ahead of any tech companies' ambitions to seize monopoly power and essentially become the Google of the AI industry. In June, DOJ antitrust chief Jonathan Kanter confirmed to the Financial Times that the DOJ is examining "monopoly choke points and the competitive landscape" in AI beyond just scrutinizing Nvidia. According to Kanter, the DOJ is scrutinizing all aspects of the AI industry -- "everything from computing power and the data used to train large language models, to cloud service providers, engineering talent and access to essential hardware such as graphics processing unit chips." But in particular, the DOJ appears concerned that GPUs like Nvidia's advanced AI chips remain a "scarce resource." Kanter told the Financial Times that an "intervention" in "real time" to block a potential monopoly could be "the most meaningful intervention" and the least "invasive" as the AI industry grows.

Nvidia hit with DOJ subpoena in antitrust probe, Bloomberg News reports

A dominant AI chip maker, Nvidia's stock price is rallying again after a reported $26 billion revenue in QI, hitting more than $1,000 per share. The U.S. Department of Justice has sent a subpoena to Nvidia as it deepens its probe into the AI heavyweight's antitrust practices, Bloomberg News reported on Tuesday, citing people familiar with the investigation. The antitrust watchdog had previously delivered questionnaires, and has now sent legally binding requests to Nvidia, the report said, adding that other companies had also received subpoenas. Officials are concerned that the chipmaker is making it harder to switch to other suppliers and penalizes buyers that do not exclusively use its artificial intelligence chips, the report said. Last month, the Information reported that the Department of Justice had launched an investigation into Nvidia after complaints from competitors that it had abused its market dominance. The subpoena comes at a delicate time for AI-related companies as investors recalibrate expectations around the technology amid worries about slow payoffs from hefty investments in it. Nvidia's quarterly forecast, which fell short of investors' expectations last week, has also softened the optimism around AI. The company's shares fell 2.5% in extended trading on Tuesday after losing 9.5% in the regular session, slashing Nvidia's market capitalization by $279 billion, a record one-day loss for any company. The shares, however, are still up 141% so far this year, thanks to a dizzying rally sparked by AI expectations. Nvidia and the DoJ declined to respond to Reuters requests for comment.

NVIDIA receives DOJ subpoena over AI market monopoly claims

DOJ has issued a subpoena to NVIDIA, signaling an escalation in its antitrust investigation into the company's dominance in the AI hardware market, as reported by Bloomberg. The investigation focuses on whether NVIDIA is using its position to limit competition and restrict access to alternative suppliers in the AI chip industry. Bloomberg indicates that NVIDIA, along with other relevant companies, has been issued legally binding subpoenas for information. Sources suggest that regulators are examining whether NVIDIA is engaging in practices "making it harder to switch to other suppliers and penalizes buyers that don't exclusively use its artificial intelligence chips." NVIDIA's rapid ascent to becoming the world's most valuable chipmaker, driven by a massive uptick in AI investments, has placed the company squarely in the crosshairs of regulators. With its quarterly sales more than doubling, NVIDIA has outpaced former industry giants like Intel, drawing the attention of antitrust authorities. The primary concern for regulators is whether NVIDIA is using its dominant position to limit competition. There are allegations that the company has made it more difficult for customers to switch to other chip suppliers and may be punishing those who don't exclusively rely on its AI hardware. These concerns were shared by individuals familiar with the investigation, though their identities remain undisclosed due to the private nature of the discussions. As part of the DOJ's ongoing investigation, NVIDIA's acquisition of RunAI -- a company specializing in AI computing management software -- has become a focal point. The deal, which was made public in April, raises concerns that it could further consolidate NVIDIA's control, making it harder for businesses to face to alternative chip providers. Additionally, regulators are looking into whether NVIDIA is offering advantageous pricing or supply deals to clients who fully commit to its AI solutions or purchase complete systems based on NVIDIA's technology, fueling worries about anti-competitive tactics. A subpoena is a legal document that orders an individual or entity to provide testimony or produce evidence, such as documents or records, for a legal proceeding. There are two main types of subpoenas: Failure to comply with a subpoena can result in legal penalties, such as fines or even imprisonment. Subpoenas are commonly used in investigations to gather crucial information. Over the past year, NVIDIA's stock has experienced significant growth, reflecting the company's dominant position in the AI and semiconductor sectors. According to TradingView data, from a yearly perspective, NVIDIA's stock has surged by 117.03%, driven largely by booming demand for its AI chips and the company's expansion into various AI-driven markets. However, despite this impressive yearly gain, NVIDIA has faced recent volatility. On September 3rd, the stock dropped sharply, reaching $108.00, which represents a 9.53% decrease in just one day. The decline continued pre-market, dipping to $106.14, fueled by concerns surrounding the Department of Justice's antitrust investigation. While the one-day drop is notable, NVIDIA's broader upward trajectory remains strong, with its year-to-date performance still up 119.32%. Despite short-term market corrections, NVIDIA's strategic positioning in AI chip manufacturing continues to sustain its long-term value. This recent dip illustrates the market's sensitivity to regulatory actions, but it is unlikely to derail NVIDIA's overall growth momentum in the evolving AI space. The relationship between Google and Apple has become a focal point in ongoing antitrust investigations. Central to this issue is the lucrative deal in which Google pays Apple billions each year to ensure that its search engine remains the default option on Apple devices, particularly Safari. This agreement gives Apple a 36% share of the advertising revenue generated by Google searches on its platform. Critics argue that this arrangement unfairly stifles competition by making it difficult for other search engines to gain traction. DOJ claims that such deals reinforce Google's dominance in search while potentially dissuading Apple from developing its own competing search tools. This investigation comes at a time when both companies face increasing scrutiny over their market power and influence, particularly in how they manage user data and monopolize key digital spaces. While financially beneficial to both, the arrangement puts Apple in a precarious position as it continues to promote itself as a pro-privacy company. The broader effects of these antitrust cases echo concerns seen in the NVIDIA case, where dominant companies are scrutinized for using their market power to maintain control and limit competition.

U.S. Department of Justice subpoenas Nvidia in AI antitrust investigation

The U.S. Department of Justice (DOJ) has issued legally binding subpoenas to Nvidia and third-party companies as part of its antitrust investigation into Nvidia, reports Bloomberg. The move does not mean that the government is launching a formal complaint, but it is a step forward from initial inquiries as the DOJ looks into whether Nvidia's dominance in the AI processor market has led to anti-competitive practices. Anti-trust officials are particularly concerned that Nvidia is limiting competition by making it harder for customers to switch to other AI processors. There are also allegations that the company uses strong arm tactics and punishes buyers who do not rely exclusively on Nvidia's AI GPUs like A100 or H100 by delaying their orders, which raises concerns regarding limiting market access to its rivals. The investigation is also examining claims that Nvidia forced cloud service providers to bundle purchases, requiring them to buy products like A100 or H100 GPUs alongside Mellanox-branded networking gear, potentially limiting their options. Additionally, the DOJ is looking into whether Nvidia charged higher prices for its networking equipment to customers who chose AI processors from rival companies like AMD and Intel. The DOJ investigation is led by its San Francisco office, which is located in the same state as Nvidia's headquarters. The U.S. government views AI technologies as vital for the country's economic competitiveness and national security, while Nvidia continues to dominate the AI processor market, its business practices remain under intense regulatory scrutiny. The DOJ's investigation is also looking into Nvidia's acquisition of RunAI, a company that develops a software scheduler for AI workloads. Regulators are worried that this deal could further entrench Nvidia's position in the market by making it even more difficult for customers to switch to alternative solutions. Amid these concerns, Nvidia has defended its practices, claiming that its products succeed due to superior performance and customer value. He emphasized that clients are free to choose whatever works best for them, while the company prioritizes those who can quickly integrate its products into existing infrastructure. Despite the regulatory scrutiny, Nvidia has seen remarkable financial growth due to its AI GPU business. Projections for 2024 estimate that Nvidia's revenue will reach $120.8 billion, up from just $16 billion in 2020, notes Bloomberg.

Nvidia hit with DOJ subpoena as part of antitrust probe: report

Nvidia has been served with subpoenas by the Justice Department as part of its ongoing investigation into potential antitrust violations by the Silicon Valley chipmaker that has dominated the artificial intelligence market. The antitrust watchdog had previously delivered questionnaires, and has now sent legally binding requests to Nvidia, according to Bloomberg News. The report added that other companies had also received subpoenas. Nvidia declined to comment on the report, but said that it would provide any information that regulators require. "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," a Nvidia spokesperson told Reuters. Nvidia on Tuesday suffered a $279 billion loss off of its market capitalization after the company's stock fell by nearly 10% as investors dampened their optimism about AI amid a global selloff on Tuesday. Jensen Huang, the company CEO who has inculcated a workplace culture where employees stay in the office up to as much as seven days out of the week, shed $10 billion from his net worth, which was valued by Bloomberg Billionaires Index at $94.9 billion as of the close of the stock market on Tuesday. The DOJ did not immediately respond to Reuters' request for comment late on Thursday. Last month, The Information reported that Justice Department investigators were looking into complaints that Nvidia allegedly abused its market dominance in selling chips that power artificial intelligence technology. Nvidia is alleged to have pressured cloud providers to buy multiple products while charging its customers more for networking gear if they bought AI chips from rivals including Advanced Micro Devices and Intel. Nvidia controls around 80% of the AI chip market. US lawmakers including Sen. Elizabeth Warren (D-Mass.) have lobbied DOJ to probe Nvidia due to concerns it was violating antitrust law. The world's largest maker of chips used both for artificial intelligence and for computer graphics has seen demand for its chips jump following the release of the generative AI application ChatGPT, triggering regulatory scrutiny on both sides of the Atlantic. Earlier this summer, French authorities accused Nvidia of anticompetitive practices. In 2022, Nvidia announced that it would abandon plans to acquire semiconductor giant ARM for $40 billion after the Federal Trade Commission sued to block it. The FTC under its current chair, Lina Khan, has been particularly aggressive in cracking down on alleged antitrust violations by large technology firms -- drawing the ire of Silicon Valley moguls and business leaders including LinkedIn co-founder Reid Hoffman and IAC boss Barry Diller. In July, Hoffman publicly urged the Democratic nominee, Vice President Kamala Harris, to dump Khan if she wins the 2024 presidential election in November. Jonathan Kanter, the top DOJ official who heads its antitrust division, has also irked business leaders over his attempts to rein in corporate power with lawsuits against the likes of Google and Apple.

NVIDIA faces mounting anti-trust investigation over its AI chip dominance

A new Bloomberg report has revealed that NVIDIA is being investigated for antitrust violations related to its market dominance in the AI chip market. According to the report, NVIDIA and other companies in the space have received subpoenas or legally binding requests to provide information on their AI chip practices. The investigation into NVIDIA specifically will look into whether the company is "making it harder to switch to other suppliers and penalizing buyers that don't exclusively use its artificial intelligence chips." Furthermore, before the reports about NVIDIA being hit with subpoenas, the company's stock price fell by approximately 9% on Tuesday, resulting in more than $279 billion in market value being wiped away. While that definitely sounds like a bag Tuesday, it hasn't even made a dent in NVIDIA's overall growth, as the company has still more than doubled its stock value since the beginning of the year. For those who don't know, NVIDIA briefly became the world's most valuable publicly traded company, beating the likes of Microsoft and Apple. Since reaching the top, NVIDIA's stock price has been on a slow decline, but it is expected to rise again when the company releases its new generation of GPUs under the "Blackwell" naming.

Nvidia gets subpoena from US DoJ, Bloomberg News reports

The U.S. Department of Justice has sent a subpoena to Nvidia as it deepens its probe into the AI heavyweight's antitrust practices, Bloomberg News reported on Tuesday, citing people familiar with the investigation. The antitrust watchdog had previously delivered questionnaires, and has now sent legally binding requests to Nvidia, the report said, adding that other companies had also received subpoenas. Officials are concerned that the chipmaker is making it harder to switch to other suppliers and penalizes buyers that do not exclusively use its artificial intelligence chips, the report said. "Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them," a spokesperson for the company said. Last month, the Information reported the Department of Justice had launched an investigation into the company after complaints from competitors that it had abused its market dominance. The subpoena comes at a delicate time for AI-related companies as investors recalibrate expectations around the technology amid worries about slow payoffs from hefty investments in it. The company said last week it has received requests for information from regulators in the U.S. and South Korea, regarding its investments, partnerships and agreements with other companies. It has also received inquiries from the EU, UK and China. Nvidia's quarterly forecast, which fell short of investors' expectations last week, has also softened the optimism around AI. The company's shares fell 1.5% in extended trading on Tuesday after losing 9.5% in the regular session, slashing Nvidia's market capitalization by $279 billion, a record one-day loss for any company. The shares, however, are still up 141% so far this year, thanks to a dizzying rally sparked by AI expectations. The DoJ declined to comment when contacted by Reuters. (Reporting by Niket Nishant in Bengaluru; Additional reporting by Jody Godoy and Max Cherney; Editing by Tasim Zahid and Shinjini Ganguli)

Feds Compel Nvidia to Share Info in Antitrust Investigation

Nvidia CEO Jensen Huang. (Credit: Bloomberg/Contributor via Getty Images) The US Department of Justice is continuing to investigate chip giant Nvidia over potential antitrust violations and has sent out subpoenas to Nvidia and third-party firms as part of its ongoing probe, Bloomberg reports Tuesday, citing sources familiar with the matter. The DOJ had previously sent questionnaires to the firms. But its subpoenas take matters a step further because they are legal written orders that compel recipients to provide additional information. The department has been investigating Nvidia since at least as early as June, and is looking into whether or to what extent Nvidia may be making it difficult for buyers to switch to its competitors. The DOJ's San Francisco office is leading the investigation, according to the report. Last month, reports suggested the DOJ is also investigating Nvidia over its acquisition of RunAI, an Israeli startup it purchased earlier this year for $700 million. In response to inquiries about the federal investigation, Nvidia has repeatedly said that it "wins on merit." "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," the company previously told PCMag in a statement. "We'll continue to support aspiring innovators in every industry and market and are happy to provide any information regulators need." French authorities are also investigating Nvidia over possible anticompetition concerns, with its regulator noting in July that it would press charges if its investigation was "fruitful." Nvidia has a market capitalization of $2.65 trillion at time of writing, making it the third-largest company by market cap after Apple and Microsoft. But on Tuesday, Nvidia's stock fell over 9.5%. This fall meant it lost $278.9 billion in value in just one day, making it the biggest single-day loss experienced by a US company, Business Insider reports. Some analysts believe this decline may be due to broader economic factors, as well as growing investor concerns around the high costs of AI. Nvidia CEO Jensen Huang, however, has previously called the costs of generative AI "negligible," and has argued that every country in the world should develop its own "sovereign AI."

More subpoenas issued to Nvidia as US continues antitrust case

The US Department of Justice (DOJ) has reportedly stepped up its antitrust investigation into Nvidia, according to Bloomberg. Now, the DOJ has issued subpoenas to gather evidence that the AI chip giant could be engaging in business practices that enable it to monopolize the market. The investigation addresses concerns that Nvidia could be preventing competition by making it difficult for customers to adopt rival products. Bloomberg cites unnamed sources familiar with the matter who claim that the DOJ, which previously sent out questionnaires, is now sending legally binding requests for information. Moreover, the DOJ also has its eyes on Nvidia's acquisition of RunAI, an AI computing management software company. Concerns are raised that the merger could further inhibit competition. Nvidia's success has been largely thanks to the rapid adoption of artificial intelligence - its powerful chips have proven instrumental in setting up and maintaining high-performance AI datacenters. The company currently has a market cap of $2.02 trillion, after peaking at more than $3 trillion earlier this year and temporarily becoming the world's most valuable company. While companies like Intel and AMD have introduced their own products, Nvidia's early and strong entry to the market positioned it well for future growth. The dominating chipmaker isn't only facing scrutiny in the US - French antitrust regulators have also launched an investigation as part of a broader look into the cloud computing market, and the EU is reportedly examining Nvidia's business practices. TechRadar Pro has asked Nvidia to comment on ongoing investigatory work, and we'll be sure to update this story with a response if we receive one.

US Department of Justice gets serious with Nvidia as it issues subpoenas in anti-competitive AI practices probe

The US Department of Justice is investigating whether Nvidia is playing fair with its AI chips. Subpoenas have reportedly been sent out to Nvidia and other companies to uncover whether customers who buy AI hardware from alternative suppliers are being penalised. According to business news outlet Bloomberg, DoJ officials had previously sent questionnaires to both Nvidia and its customers. But now it has escalated its investigations to legally binding subpoenas, a move which Bloomberg says is a critical step on the path toward the DoJ taking formal action against Nvidia. The report doesn't go into any detail regarding exactly how Nvidia might be "punishing" its customers for going to alternative suppliers for AI chips. But Nvidia has such a stranglehold on the market for GPUs used to accelerate AI training and inferencing, that it's not hard to imagine how, for instance, withholding supply or ramping up prices would get very painful, very quickly for customers. The DoJ is concerned that Nvidia's practices are making it harder for customers to switch suppliers, which in turn undermines competition in the market. In response, Nvidia told Bloomberg that, "Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them." Incredibly, Bloomberg also reports that such is the demand for Nvidia's H100 AI chips, they have been selling for as much as $90,000 a pop, which does rather put the $1,600 MSRP of the RTX 4090 into context. The net result is absolutely massive revenues for Nvidia, with a forecast of $120 billion for 2024. That compares to revenues of just $16 billion as recently as 2020. However, the shine has slightly come off Nvidia and its AI mastery of late. Its share price has been on the slide in recent weeks, falling from a peak of $130 on August 19 to $108 today. Indeed, the company's market cap fell by $279 billion on Tuesday this week alone. Those adjustments have come as the hype around AI has cooled somewhat. For now, it's not clear how the latest AI models can be turned into revenue streams. Meanwhile, competitors in the AI hardware space including AMD are finally rumbling into action. Nvidia's near-monopoly probably won't last forever, in other words. That final observation is presumably why Nvidia would get involved in the kind of sharp practices the DoJ is worried about. Of course, this kind of behaviour is hardly new to the tech sector. For instance, Intel has been subject to numerous antitrust investigations over the years, both in the US and EU. So, it's somewhat par for the course for powerful incumbents to get hooked on market dominance and the fat revenues they imply. Whether Nvidia is guilty of such practices is something that will presumably emerge over the course of this latest DoJ probe. Meanwhile, what impact any of this might have on what we really care about, namely painful GPU prices for gamers, is anyone's guess.

Nvidia gets subpoena from US DoJ

The company said last week it has received requests for information from regulators in the U.S. and South Korea, regarding its investments, partnerships and agreements with other companies. It has also received inquiries from the EU, UK and China.The U.S. Department of Justice has sent a subpoena to Nvidia as it deepens its probe into the AI heavyweight's antitrust practices, Bloomberg News reported on Tuesday, citing people familiar with the investigation. The antitrust watchdog had previously delivered questionnaires, and has now sent legally binding requests to Nvidia, the report said, adding that other companies had also received subpoenas. Officials are concerned that the chipmaker is making it harder to switch to other suppliers and penalizes buyers that do not exclusively use its artificial intelligence chips, the report said. "Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them," a spokesperson for the company said. Last month, the Information reported the Department of Justice had launched an investigation into the company after complaints from competitors that it had abused its market dominance. The subpoena comes at a delicate time for AI-related companies as investors recalibrate expectations around the technology amid worries about slow payoffs from hefty investments in it. The company said last week it has received requests for information from regulators in the U.S. and South Korea, regarding its investments, partnerships and agreements with other companies. It has also received inquiries from the EU, UK and China. Nvidia's quarterly forecast, which fell short of investors' expectations last week, has also softened the optimism around AI. The company's shares fell 1.5% in extended trading on Tuesday after losing 9.5% in the regular session, slashing Nvidia's market capitalization by $279 billion, a record one-day loss for any company. The shares, however, are still up 141% so far this year, thanks to a dizzying rally sparked by AI expectations. The DoJ declined to comment when contacted by Reuters.

Nvidia gets subpoena from US DoJ: Report

The U.S. Department of Justice has sent a subpoena to Nvidia as it deepens its probe into the AI heavyweight's antitrust practices, Bloomberg News reported on Tuesday, citing people familiar with the investigation. The antitrust watchdog had previously delivered questionnaires, and has now sent legally binding requests to Nvidia, the report said, adding that other companies had also received subpoenas. Officials are concerned that the chipmaker is making it harder to switch to other suppliers and penalizes buyers that do not exclusively use its artificial intelligence chips, the report said. Last month, the Information reported that the Department of Justice had launched an investigation into Nvidia after complaints from competitors that it had abused its market dominance. Nvidia stock slips even after earnings top Wall Street estimates and demand for AI chips surge The subpoena comes at a delicate time for AI-related companies as investors recalibrate expectations around the technology amid worries about slow payoffs from hefty investments in it. Nvidia's quarterly forecast, which fell short of investors' expectations last week, has also softened the optimism around AI. The company's shares fell 2.5% in extended trading on Tuesday after losing 9.5% in the regular session, slashing Nvidia's market capitalization by $279 billion, a record one-day loss for any company. The shares, however, are still up 141% so far this year, thanks to a dizzying rally sparked by AI expectations. Nvidia and the DoJ declined to respond to Reuters requests for comment. Read Comments

DOJ subpoenas NVIDIA as part of antitrust probe regarding AI processors

The government is trying to figure out if the company "penalizes buyers that don't exclusively use its artificial intelligence chips." The DOJ has sent subpoenas to NVIDIA and other companies as part of an antitrust probe, . The federal government is seeking evidence that the company violated antitrust laws with regard to its AI processors. The presence of these subpoenas means the DOJ is one step closer to launching a formal complaint. Officials speculate that NVIDIA is making it difficult for other companies to switch hardware suppliers and that it "penalizes buyers that don't exclusively use its artificial intelligence chips." This probe , but recently escalated to include legally binding requests for information. At the root of the DOJ probe is NVIDIA's , a company that makes software for managing AI computing tasks. The concern is that this purchase will make it harder for business customers to switch away from NVIDIA chips, as it would also necessitate a change in software. However, that's not the only reason behind this investigation. Regulators are also looking into whether NVIDIA gives preferential treatment to customers who exclusively use its technology or buy its complete systems. This special treatment allegedly includes first dibs on hardware and related supplies and unique pricing models. NVIDIA has offered a terse response, telling Bloomberg that it "wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them." The inference here is that the company's market dominance comes down to hard work and not sweetheart deals. The investigation is still in its early days, as it hasn't yet blossomed into a formal complaint. The company's ahead of the DOJ announcement, but that was likely due to . However, the stock is still up more than double this year as the AI boom continues to do its thing.

Nvidia has been subpoenaed by the Justice Department in its antitrust probe

A week after reporting another record quarter, chipmaker Nvidia has reportedly been subpoenaed by the U.S. Department of Justice over complaints that it is violating antitrust laws. The Justice Department has also subpoenaed other companies for evidence after initially sending questionnaires about Nvidia's business practices, Bloomberg reported, citing unnamed people familiar with the matter. In June, the Justice Department and the Federal Trade Commission reached a deal to carry out antitrust investigations into Nvidia and fellow artificial intelligence industry leaders Microsoft and OpenAI. U.S. officials are reportedly concerned by complaints that include how Nvidia has made it difficult for customers to switch chip providers. Nvidia and the Justice Department both declined to comment. The Department of Justice reached out to the chipmaker's competitors, including Advanced Micro Devices and AI chip startups, to gather information, including allegations of threatening customers who buy products from competitors, as well as Nvidia's recent acquisitions of AI software startups, The Information reported in August, citing unnamed people familiar with the matter. Some of Nvidia's customers fear it will charge a higher price for its chips, or even restrict the number of chips it will sell, if a customer is also buying chips from competitors, customers' employees told The Information. Justice Department officials were reportedly investigating whether the chipmaker had pressured some of its customers, including cloud providers that rent servers powered by Nvidia's chips to developers, to buy more of the company's technology. Meanwhile, Nvidia's shares have taken a hit since its second-quarter earnings report. The chipmaker's shares were down around 9.5% at the market close on Tuesday, losing a record $279 billion. Its stock was down around 2% in after-hours trading. However, Nvidia's shares are up around 124.2% so far this year.

Nvidia faces increased antitrust pressure as Justice Department sends subpoena requests - SiliconANGLE

Nvidia faces increased antitrust pressure as Justice Department sends subpoena requests The U.S. Department of Justice has reportedly sent subpoenas to Nvidia Crop. and other companies as part of an antitrust investigation into the company that appears to be ramping up. Bloomberg, citing people familiar with the investigation, reports that the Justice Department had previously delivered questionnaires to the companies, with the subpoenas being the next step. The subpoenas legally require Nvidia and other recipients to provide any information requested as part of the antitrust probe. The investigation, which has not yet resulted in any formal complaint, is said to be related to concerns that Nvidia is making it harder to switch to other suppliers and that the company penalizes buyers who don't exclusively use its artificial intelligence chips. Reports that Nvidia, along with Microsoft Corp. and OpenAI, were under investigation first emerged in June with a report that the Department of Justice and Federal Trade Commission had come to an agreement on how to launch the investigation. Both the FTC and the Justice Department are tasked with antitrust enforcement, hence the agreement on how to proceed was an important milestone in investigating the antitrust claims leveled at the companies. At the time it was noted that the Justice Department was investigating whether Nvidia was potentially abusing its market dominance for AI processors. Grounds for the investigation were said to include the software Nvidia ships with its chips and the way it distributes those chips to customers. The investigation into Microsoft and OpenAI, which is being undertaken by the FTC, is seeking to determine whether the two companies have "unfair advantages" in the large language model market. The common theme between all three is AI - Nvidia is by far the market leader in chips and AI software, while OpenAI is the leading player in the generative AI space backed by Microsoft. In response to the news, a spokesperson for Nvidia said that its market dominance stems from the quality of its products, which deliver faster performance. "Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them," the spokesperson said. Nvidia's market position and practices are not the only part of the company's business currently on the Justice Department's radar, with the department also reported in August to be taking a close look at Nvidia's April acquisition of Run:ai, a company that develops software for managing graphics cards clusters. Where that case becomes interesting is that it has been claimed that the Justice Department is investigating whether Nvidia bought the company to "bury a technology that could curb its main profit engine."

Nvidia said to receive subpoena from DOJ over antitrust probe: report

Nvidia (NASDAQ:NVDA) and other companies have received a subpoena tied to the Dept. of Justice's probe into the Jensen Huang-led company on concerns that it violated antitrust laws, Bloomberg reported. U.S. officials previously reached out to several Nvidia competitors, including AMD (AMD), Intel (INTC) and AI chip startups, to collect information about the complaints, the news outlet added. The officials are concerned that Nvidia is making it harder to switch to competitors, the news outlet added, citing people familiar with the matter. Nvidia owns approximately 80% of the artificial intelligence accelerator market Nvidia told Seeking Alpha last month that it competes "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." Nvidia added that it would continue to support aspiring innovators in every industry and market and would provide any information regulators need. More on Nvidia Nvidia: Not Just An AI Play Nvidia Stock Is Selling Off: It's Not Because Of Blackwell Nvidia: Digesting Some Growing Pains Nvidia, Intel, AMD lead semiconductor plunge to start September Semiconductor stocks remain volatile despite surging sales

Nvidia gets subpoena from US DoJ: Bloomberg News

An NVIDIA logo is shown at SIGGRAPH 2017 in Los Angeles, California, U.S. July 31, 2017. Reuters-Yonhap The U.S. Department of Justice has sent a subpoena to Nvidia as it deepens its probe into the AI heavyweight's antitrust practices, Bloomberg News reported on Tuesday, citing people familiar with the investigation. The antitrust watchdog had previously delivered questionnaires, and has now sent legally binding requests to Nvidia, the report said, adding that other companies had also received subpoenas. Officials are concerned that the chipmaker is making it harder to switch to other suppliers and penalizes buyers that do not exclusively use its artificial intelligence chips, the report said. "Nvidia wins on merit, as reflected in our benchmark results and value to customers, who can choose whatever solution is best for them," a spokesperson for the company said. Last month, the Information reported the Department of Justice had launched an investigation into the company after complaints from competitors that it had abused its market dominance. The subpoena comes at a delicate time for AI-related companies as investors recalibrate expectations around the technology amid worries about slow payoffs from hefty investments in it. The company said last week it has received requests for information from regulators in the U.S. and South Korea, regarding its investments, partnerships and agreements with other companies. It has also received inquiries from the EU, UK and China. Nvidia's quarterly forecast, which fell short of investors' expectations last week, has also softened the optimism around AI. The company's shares fell 1.5% in extended trading on Tuesday after losing 9.5% in the regular session, slashing Nvidia's market capitalization by $279 billion, a record one-day loss for any company. The shares, however, are still up 141% so far this year, thanks to a dizzying rally sparked by AI expectations. The DoJ declined to comment when contacted by Reuters. (Reuters)

Here's why Nvidia's aggressive sales tactics are in the DOJ's crosshairs

Nvidia stock has dropped roughly 18% since Aug. 19, with the majority of the damage coming after a 9.5% plunge on Tuesday that erased a record $279 billion in market cap. Just after the dark day of trading for Nvidia, Bloomberg reported that the U.S Department of Justice (DOJ) has ramped up its antitrust probe against the company. DOJ officials reportedly sent a subpoena to Nvidia, and other involved companies, which includes "legally binding requests that oblige recipients to provide information," according to unnamed Bloomberg sources familiar with the matter. Subpoenas often precede the filing of a formal complaint against a company under investigation. DOJ officials have expressed concern that Nvidia makes it difficult for its customers to switch to new suppliers and penalizes those that don't exclusively use its AI chips, according to Bloomberg's sources. The DOJ investigation into Nvidia began in July, The Information first reported, after similar allegations from competitors about Nvidia's pricing strategies. In a statement to Fortune, Nvidia said that it "wins on merit" and customers are free to choose whatever solution works best for them, adding that the company "scrupulously" adheres to all laws. "We have inquired with the U.S. Department of Justice and have not been subpoenaed. Nonetheless, we are happy to answer any questions regulators may have about our business," a representative added. Still, the tech world's issues with Nvidia's tactics certainly seem to be widespread. "All of Nvidia's competitors have issued grievances with me. I'm not going to name them, but you can imagine who they might be," Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, a technology analyst and advisory firm, told Fortune. "Nvidia's customers haven't talked about any of these tactics, but they have talked about the desire to have -- what words did they use -- a more 'balanced supply chain,'" he added. Nvidia's April acquisition of RunAI, which provides AI computation software, is also under the DOJ's microscope, per Bloomberg's report. There are concerns that the purchase will further strengthen Nvidia's grip on the entire AI chip supply chain, making it more challenging for its customers to switch to competitor's products. Overall, Moorhead believes this could end up being "a very serious probe" for Nvidia, which could slow its business slightly, force the company to open up some of its software platform for use by competitors, or, eventually, lead to a significant fine. "The reason I say that is first of all, technically, Nvidia is a monopoly. Second, AI is super important to society, economics and business today and into the future. So it's a super hot button [issue]. And that means regulators are super motivated to do something," he warned. Nvidia controls roughly 90% of the AI-critical next-generation chip market, and it has made big steps toward vertical integration in recent years, branding itself as not just a chip company but an "AI platform enterprise." The impressive market share gains and suite of both software and hardware AI offerings have made Nvidia a monopoly in the view of many experts, but the DOJ will have to prove more than just that. "It's not illegal to be a monopoly. It's illegal -- if you're a monopoly -- to squash competition and harm consumers," Moorhead noted. Tying agreements, where a seller ties the sale of one product to the purchase of another, are one of the ways Nvidia is allegedly abusing its monopoly power. These agreements, also called "tie-in" sales, are not always illegal, but can be challenged under four provisions of antitrust laws, according to the DOJ. Both section one and section two of the 1890 Sherman Antitrust Act, which prohibit the "restraint of trade" and make it illegal to "monopolize," can be used to challenge tying agreements. Similarly, the DOJ could rely on section three of the 1914 Clayton Antitrust Act, which forbids acts that will "substantially lessen competition," or section five of the 1914 Federal Trade Commission Act, which prohibits "unfair competition." Jim Keller, CEO of the AI chipmaker Tenstorrent, an Nvidia competitor, told The Information in August that Nvidia's sales tactics are not illegal, in his view, but he admitted customers often "feel pressured to buy Nvidia's networking gear to guarantee themselves access to the company's vaunted AI server chips." While the DOJ is investigating claims of tying agreements, they will likely have to prove that the tying was done with official contracts, rather than merely "pressure." But that may be difficult to do, according to Scott Bickley, practice lead and principal research director at Info-Tech Research Group, a tech research and advisory firm. He noted that semiconductors have always been dished out on allocation schedules, with contracts both parties agree to in advance, and Nvidia isn't being accused of breaching any contracts. "Of course, they're going to try to sell their gear -- which they will probably say is more compatible, that you'll get a better quality experience if you run Nvidia chips with Nvidia racks and things like that. But to my understanding, and from what I'm hearing, they haven't forced that. They're heavily encouraging it, but they're allowing their biggest customers to utilize their own gear and their own hardware for their data center designs," he explained. Bickley argued that the tying agreement beef is largely a jockeying match for pricing between Nvidia and its very influential and powerful big tech clients in a space with little to no serious competition. "I don't think Nvidia's doing anything -- that I can see, at least on the surface -- that would be breaking the law," he said. "I think they've just become the 800 pound gorilla in a space where there's not any other 800 pound gorillas to fight them off at this point." The potential use of exclusionary rebates is likely another reason the DOJ could be investigating Nvidia for antitrust violations. "[Those say] I'm only going to give you this good price if you don't buy the competition. It's not volume-based pricing, it's exclusionary-based pricing," Moorhead explained, noting "you can't do that if you're a monopoly." Nvidia's software platform CUDA might also be under the microscope. CUDA is used in everything from low level drivers to generative AI models, and it isn't open to competitors like AMD or Intel to use. "Now, if you're not a monopoly, that's fine. If you have monopolist powers, people might look at that and say, well, 'You're more in the marketplace business, right?" Moorhead said, explaining that: "In that case, you have so much power you have to open this up, even if it's your competitors." Still, Bickley argued that Nvidia is simply utilizing its technology advantage to increase profits and gain market share, rather than engaging in anti-competitive behavior. Attempting to fine, break up, or slow Nvidia would only impede the development of AI in his view. "What we need is some good, old fashioned innovation," Bickley argued. "You know, have some other companies come out with competing products and technologies that start to siphon away some of that investment from Nvidia." Nvidia could face significant challenges if a DOJ investigation finds antitrust violations, experts say. But even if there aren't any violations, the chipmaker's business operations could be slowed, at least slightly, by the investigation. "When anybody has the Department of Justice looking at them, it slows things down," Moorhead explained, likening it to putting small bits of sand in a gas tank. "You have to have a lawyer approve your allocations. You have to have a lawyer approve your pricing. You have to have a lawyer -- in meetings that you normally wouldn't have a lawyer in." Nvidia could also be forced to open up its CUDA software platform to competitors in a worst-case scenario, leading to increased competition. "Apple had to open up the app store, and Microsoft had to open up its API with Internet Explorer, this would likely be something like that, which would enable AMD, Intel, and others...to tap into CUDA on an equal basis," Moorhead explained. If the DOJ is able to prove Nvidia acted illegally, it may need to pay heavy fines as well, and not just in the U.S. "I do believe that this case is going to spread to the EU, Korea, Japan and likely Taiwan -- probably not China -- which, again, just makes the scrutiny even higher. But essentially, it's paying a fine," Moorhead said. However, neither Moorhead nor Bickley believe these fines will dramatically impact Nvidia's business, in large part due to the company's distinct technology advantage and surging revenues. Both experts also noted that it will take months, or more likely years, for the DOJ's investigation to conclude. "By the time it comes to a conclusion, whatever that conclusion is, the money will have been made by Nvidia, so any fine that they put forward will be basically pocket change," Bickley said. "I don't think it will have any material impact at all on them and their and their earnings and their financial position." Bickley doesn't see the DOJ's case as likely to succeed, either, despite investors' negative reaction to news of the investigation. "I don't really see a path for them to come up with any type of true anti-competitive judgment," he said. "I don't think it's going to come up much."

Nvidia Hit With More Antitrust Investigation Requests: Report

The new subpoenas are an escalation beyond the questionnaires the Justice Department previously sent to Nvidia, according to Bloomberg. Nvidia has reportedly received legally binding requests for information from the United States as part of the Department of Justice's investigation into whether the semiconductor vendor broke antirust rules as part of its domination over the artificial intelligence processor market. The new subpoenas are an escalation beyond the questionnaires the Justice Department previously sent to Nvidia, according to Bloomberg. The U.S. is closer to launching a formal complaint against the Santa Clara, Calif.-based vendor. Investigators are looking at whether Nvidia makes supplier switching difficult for customers, whether it penalizes them for not exclusively using Nvidia AI chips and the acquisition of AI computing software company RunAI, according to Bloomberg. The Justice Department's San Francisco office has taken the lead on the inquiry. [RELATED: Google Breakup A Possibility After Monopoly Ruling: Report] CRN has reached out to Nvidia and the Justice Department for comment. The U.S. and European Union have scrutinized multiple tech vendors for alleged anti-competitive behaviors as well as unusual deals made with AI upstarts as business demand for the emerging technology grows. Google was recently ruled a monopoly for its practices in the online ads market. In January, the FTC announced that Microsoft, OpenAI, Amazon, Google parent Alphabet and Anthropic needed to provide information on their recent investments and partnerships. In July, the United Kingdom's Competition and Markets Authority (CMA) published a letter saying that it can "begin an investigation" into an unusual deal between Microsoft and AI upstart Inflection that resulted in Microsoft hiring Inflection's co-founder and CEO.

Nvidia's market practices questioned as US Justice Department presses subpoena

The US Justice Department sent subpoenas to Nvidia Corp. and other companies as it seeks evidence that the chipmaker violated antitrust laws, an escalation of its investigation into the dominant provider of AI processors. The DOJ, which had previously delivered questionnaires to companies, is now sending legally binding requests that oblige recipients to provide information, according to people familiar with the investigation. That takes the government a step closer to launching a formal complaint. Antitrust officials are concerned that Nvidia is making it harder to switch to other suppliers and penalizes buyers that don't exclusively use its artificial intelligence chips, according to the people, who asked not to be identified because the discussions are private. ALSO READ| 4 Indians dead in fiery Texas crash involving 5 vehicles, who were the victims? Nvidia shares, which suffered a record-setting rout on Tuesday, fell further in late trading after Bloomberg reported on the subpoenas. Still, the stock has more than doubled this year -- fueled by explosive sales growth at the Santa Clara, California-based chipmaker. As part of the probe, which Bloomberg previously reported in June, investigators have been contacting other technology companies to gather information. The DOJ's San Francisco office is taking the lead running the inquiry, the people said. A representative for the DOJ declined to comment. In response to questions about the probe, Nvidia said that its market dominance stems from the quality of its products, which deliver faster performance. "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 said in an emailed statement. Nvidia has drawn regulatory scrutiny since becoming the world's most valuable chipmaker and a key beneficiary of the AI spending boom. Sales have been more than doubling each quarter, and it's eclipsed onetime chip leaders such as Intel Corp. ALSO READ| Frenchman accused of inviting strangers to rape drugged wife gave them 'sick list of rules' In the DOJ probe, regulators have been investigating Nvidia's acquisition of RunAI, a deal announced in April. That company makes software for managing AI computing, and there are concerns that the tie-up will make it more difficult for customers to switch away from Nvidia chips. Regulators also are inquiring whether Nvidia gives preferential supply and pricing to customers who use its technology exclusively or buy its complete systems, according to the people. Nvidia, founded in 1993, made its name by selling graphics cards to computer gamers. But its approach to chipmaking ultimately proved useful for building AI models, a process that involves bombarding the software with data. The company also has rapidly expanded its lineup with a range of software, servers, networking and services -- all aimed, Nvidia argues, at speeding up the deployment of AI. Nvidia Chief Executive Officer Jensen Huang said he prioritizes customers who can make use of his products in ready-to-go data centers as soon as he provides them, a policy designed to prevent stockpiling and speed up the broader adoption of AI. The success of its products -- along with struggles by rivals to field alternative chips -- has made Nvidia a crucial part of the supply chain for some of the biggest companies in the world. Microsoft Corp. and Meta Platforms Inc., for example, spend more than 40% of their budget for hardware on the chipmaker's gear. During the peak of shortages of Nvidia's H100 accelerator, individual components were retailing for as much as $90,000 each. ALSO READ| Hawk Tuah meme girl announces her next project under Jake Paul: 'I'm just getting...' Analysts project that Nvidia will chalk up $120.8 billion of revenue in calendar 2024, up from $16 billion in 2020, with most of that money coming from its data center unit. In fact, Nvidia is set to bring in more profit this year than the total sales of its nearest rival, Advanced Micro Devices Inc. There also are broader regulatory questions about Nvidia's practices. Access to AI capabilities has become a key focus for governments around the world, with the technology becoming increasingly vital to economic strength and national security.

Nvidia Subpoenaed: Why the DOJ Is Investigating

The US Justice Department sent subpoenas to Nvidia and other companies as it seeks evidence that the chipmaker violated antitrust laws, an escalation of its investigation into the dominant provider of AI processors. Vanderbilt Law School Professor Rebecca Allensworth joins Ed Ludlow and Caroline Hyde to discuss on "Bloomberg Technology." (Source: Bloomberg)