The U.S. Department of Justice (DOJ) has launched an investigation into Nvidia, prompted by allegations of the company potentially exploiting its dominant position in the AI processor market, according to a report by The Information. The probe focuses on whether Nvidia's business practices unfairly limit competition by forcing its customers to buy products in bundles or using strongarm tactics to cease business with its rivals.
The U.S. DoJ is reportedly examining whether Nvidia had threatened to punish customers who buy their AI processors from its rivals like AMD and Intel or smaller startups by delaying their long awaited orders. Such practices could clearly stifle competition and eventually limit options on the market of AI processors. However, Nvidia denies such business practices and asserts that it allocates GPUs fairly between its customers.
The U.S. DoJ has reportedly contacted Nvidia competitors, including AMD, to acquire information about the complaints, The Information claims.
Also, the investigation is looking into allegations that Nvidia pressured cloud service providers into purchasing multiple products together, such as A100 or H100 GPUs for AI and HPC workloads along with Mellanox-branded networking gear, possibly restricting their choices. The DoJ is also investigating claims that Nvidia may have imposed higher prices on networking equipment for customers opting for AI chips from competitors like AMD and Intel.
Nvidia currently holds a significant share of the AI processor market, approximately 80%, according to some analysts. This dominant position has raised concerns among competitors and regulators, who worry about the company's influence on market dynamics. The ongoing investigation aims to determine if Nvidia's actions constitute an abuse of this market power.
In response to the investigation, Nvidia said that it operates within legal boundaries, emphasizing its commitment to offering products transparently across various platforms, including cloud and on-premises solutions. The company has expressed readiness to cooperate with the investigation and provide necessary information to regulators.
The U.S. DoJ investigation of Nvidia follows a similar investigation by French authorities. The French Competition Authority is concerned that the AI sector essentially depends on Nvidia's processors that use the company's proprietary CUDA software stack.
