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After spending a couple of topsy turvy days on the stock market that saw its shares soar after positive earnings results from AMD and then sink the next day, NVIDIA is now purportedly facing investigations from the Justice Department that accuse it of unfairly using its dominant market position to drive customer bargains. NVIDIA's GPUs are widely believed to be industry leaders in computing artificial intelligence workloads, and their popularity has propelled the stock to set new records in 2024.
As part of its investigations, the DOJ has asked NVIDIA's rivals, including AMD and chip design startups, for their comments. Today's report adds another round of US government scrutiny of the firm's affairs.
NVIDIA Purportedly Being Investigated By DOJ For Bundling Other Products With AI GPUs
This report comes from The Information, which alleges that NVIDIA has engaged in a variety of anti competitive practices for its AI products. According to the details, these include threatening customers if they buy AI products from rivals, acquiring startups with the sole aim of increasing their influence in the AI industry, bundling other products such as networking cables with the AI GPUs and raising prices of GPUs or withholding inventory if customers also buy from rivals.
NVIDIA's primary rival in the AI accelerator is AMD, which is the only firm that is shipping AI accelerators on scale. The other rival, Intel, is yet to ship its Gaudi accelerator in volume with estimates suggesting that these shipments could take place later this year.
NVIDIA's statement outlined its years-long effort to invest in AI products and added that its actions not only adhere to legal requirements but also allow its customers to choose their GPU suppliers at will.
"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," read the statement given to SeekingAlpha.
The alleged unfair price hikes also cover networking equipment, with The Information's report noting that the DOJ is investigating whether NVIDIA charged higher prices for networking equipment too if customers purchase AI GPUs from rivals.
Today's report adds to NVIDIA's troubles with the US government. It comes on the heels of another report from Politico which claimed that the DOJ is also investigating NVIDIA's acquisition of Israeli AI software startup Run:ai. Quoting five sources, the DOJ is checking whether NVIDIA is seeking to build an unfair advantage in the industry by acquiring a firm whose virtualization software can reduce the number of GPUs needed to run AI workloads.
Virtualization allows users to mimic a chip's functionality on another separate chip. The software affair follows after government officials in France worried about the criticality of NVIDIA's CUDA software for the AI industry.
NVIDIA's statement to Politico mostly read the same as the one given to Seeking Alpha. It also added that the firm "wins on merit, as reflected in our benchmark results and value to customers," and outlined that NVIDIA will "continue to support aspiring innovators in every industry and market and are happy to provide any information regulators need.”
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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