The U.S. Department of Justice (DOJ), has launched an antitrust investigation on Artificial Intelligence giant company Nvidia, over alleged abuse of its market dominance in the AI chip market.
According to a CNBC report, in recent weeks, U.S. officials have reached out to several Nvidia competitors, including advanced Micro Devices and AI chip startups, to gather information about the complaints.
The issues range from allegations that Nvidia has threatened to punish its customers who buy products from its competitors to potential concerns about its recent acquisition of startups that strengthen its grip on the software AI developers use.
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Investigators are therefore examining whether Nvidia imposes higher prices on customers who purchase AI chips from competitors. Additionally, the DOJ is investigating whether Nvidia has coerced customers into buying supplementary products, such as cables for connecting servers, as part of their purchasing agreements.
In response to the report, a spokesperson for Nvidia said,
“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 spokesperson further added that Nvidia is happy to provide any information regulators need.
Nvidia’s position in the AI chip market has been described as a moat by some experts. Its flagship AI graphics processing units (GPUs), such as the H100, coupled with the company’s CUDA software led to a head start on the competition that switching to an alternative can seem almost unthinkable.
The AI tech giant controls approximately 90% of the market for graphics processing units (GPUs), which are essential for training and deploying Al models. Nvidia’s GPs, particularly the high-demand H100 chips, are critical for generative Al and other advanced computing applications. The company’s dominance has raised issues about accessibility and pricing, as some customers face high costs and availability challenges.
This DOJ inquiry is part of broader scrutiny of tech giants like Microsoft and OpenAl, aiming to ensure competitive practices and prevent market abuse. This investigation underscores concerns about potential monopolistic practices in the rapidly growing Al sector.
Industry experts see the recent US deperatment of Justice investigation on Nvidia as a necessary measure to maintain healthy competition and innovation in the Al space. While Nvidia’s market position is a testament to its technological advancements, there are concerns that unchecked dominance could stifle innovation and limit the availability of cutting-edge technology to a broader range of companies and developers.
However, the company has committed to release a new AI chip architecture every year, rather than every other year as was the case historically, and to put out new software that could more deeply entrench its chips in AI software, giving it a significant edge in the AI market.