French antitrust regulator are slapping Nvidia with charges of anti-competitive practices, as per sources. This investigation done by France antitrust is making it the first enforcer to act against the computer chip maker. The charges follow a raid by French regulators of Nvidia’s offices in Paris by the French authorities in September.
French antitrust regulators are reportedly on the verge of slapping Nvidia Corp. with charges that allege it has engaged in anticompetitive practices regarding its domination of the artificial intelligence computing industry.
Nvidia anti-competitive practices
Nvidia has emerged as the world’s foremost supplier of graphics process units and high-speed networking gear that’s required to build the massive clusters required to train and serve the most powerful AI models of today. According to some estimates, Nvidia commands an 80% share of the AI infrastructure market, and that fact seems to have ruffled a few feathers at the French competition authority.
That raid was intended to gather evidence for the antitrust investigation, and came as part of a broader investigation by the agency into the cloud computing sector, which is looking at allegations some U.S. companies may have hindered competition in the country.
French regulators raid
The France antitrust investigation had a statement of objections or charge sheet that followed dawn raids in the graphics cards sector in September last year, which sources said targeted Nvidia. The raids were the result of a broader inquiry into cloud computing.
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.
French antitrust charges on Nvidia
It’s not yet clear what kind of charges the French regulators intend to bring against Nvidia. However, the Autorité published a report last week that called out a number of “risks” pertaining to the chipmaker. The company in a regulatory filing last year said regulators in the European Union, China and France had asked for information on its graphic cards.
“The Autorité found a number of potential risks, such as price fixing, production restrictions, unfair contractual conditions and discriminatory behavior,” the report stated.
The European Commission is unlikely to expand its preliminary review for now, since the French authority is looking into Nvidia, as per sources.
The French antitrust investigation issued last Friday on competition in generative AI cited the risk of abuse by chip providers.
It voiced concerns regarding the sector’s dependence on Nvidia’s CUDA chip programming software, the only system that is 100% compatible with the GPUs that have become essential for accelerated computing.
It also cited unease about Nvidia’s recent investments in AI-focused cloud service providers such as CoreWeave.
Tough to prove the charges against Nvidia
If the French authorities do press charges against Nvidia, both sides will be hard pressed to prove their case, said Rob Enderle, an analyst with the Enderle Group. Nvidia may be compelled to prove it hasn’t done anything wrong.
“However, France also [places] far more emphasis on coded laws which likely haven’t been updated for AI specifically and current tech in general, potentially giving Nvidia an advantage they wouldn’t have in the U.K. or U.S.,” Enderle said.
Whether or not France has a viable case remains to be seen, but the analyst said the Autorité may struggle to prove that the chipmaker has engaged in price fixing.
Fines for breaching French antitrust rules
Companies risk fines of as much as 10% of their global annual turnover for breaching French antitrust rules, although they can also provide concessions to stave off penalties.
The U.S. Department of Justice is taking the lead in investigating Nvidia as it divvies up Big Tech scrutiny with the Federal Trade Commission.
The chipmaker also faces some tough questions from antitrust regulators elsewhere. The EU is also reportedly conducting an investigation into the company to see if it’s abusing its market dominance. In the U.S., the Department of Justice is said to be planning its own antitrust probe into Nvidia, having reportedly “grown worried” about its leading position in the AI chip market.
Nvidia stock update
Nvidia stock closed high up +0.76 at a price of $124.30
